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" ?? ?"  ?#  ??#  ?#  # $!$!?$!X$!? %"? ?%"? <? %"  %"  ?&#  &#  &# ? ?&#~ '$?'$'$(%?(%(%)&)&?)&*'*'*'*(+(+(,) ,) ,*-* -* .+?.+/,/,0-?0-1.2/2/30 41 52 63758uCa:\edlogo3.pcx) p`CG Times234G(2$0 0 0 0 I- ($      +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ KLMXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ рo[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)LenderisdefinedinAppendixC.NX>=XN)X>=XXNX>= ##))Xd#        <6X9`(.Courier 10cpiTT TT)  +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ PQRXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)ԢServicerisdefinedinAppendixC.NX>=XN)X>=XXNX>= ##))Xd#         G +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ TUVXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)SeedefinitioninAppendixC. ##))Xd#         l +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ XYZXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)Appliesattheindividuallenderidentificationnumber(ID)level. ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ \]^XXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)Forthepurposeofmakingthisdetermination,theterm everyaspectmeans  allthefunctionsaddressedinthecompliancerequirementsspecifiedinthisGuide.Therefore,aseparateauditwouldberequiredoftheservicerifthelendersauditisnarrowinscopeanddoesnotcoverallofthefunctionsaddressedinthecompliancerequirementsspecifiedinthisGuidethatareperformedbytheservicerfortheirlenderclient. ##))Xd#         ? +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ `abXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ )X)X>=N)Footnote1ofSSAENo.4,AgreedUponProceduresEngagements(AICPA,  ProfessionalStandards,vol.1,ATsec600),providesdetailsofSSAENo.4'samendmentsofSSAENo.3.NX>=XN)X>=XXNX>= ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ defXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)TheSingleAuditActof1984wasamendedbytheSingleAuditActAmendmentsof  1996andiseffectiveforfiscalyearsbeginningafterJune30,1996.WeunderstandOMBintendstocombinetheauditrequirementsunderCircularsA133andA128.ItisexpectedthatOMBwillreviseCircularA133toalsobeapplicabletostateandlocalgovernmentsandthenrescindOMBCircularA128.ManagementandPractitionersshouldbealerttochangesinrelevantstatutesandOMBrequirementsandapplytheprovisionscontainedthereinaccordingly.NX>=XN)X>=XXNX>= ##))Xd#        )Lr  Z (CG Times RegularFRAUD)i  Z (CG Times Regular `CG TimesW1)L  Z (CG Times Regular { +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ mnoXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXoӀ)X)X>=p)Forexample,EDForms799,IndividualRecordReview,LoanOriginationFeesetc. ##))Xd#        <6X9`(6Courier 10cpiTT T T TT)  +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ rstXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @  @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ р)X)X>=N)Unlessotherwisespecifiedbystatutory/regulatoryauthority,theterm timely  mannermeansassoonaspossibleinthecourseofbusiness.Practitionersshould  useprofessionaljudgementandshouldalsomakethedeterminationinrelationtotheactivityinvolved.Forexample,sinceEDForm799'sarefiledonaquarterlybasis,noncompliancerelatedtotheclassificationofloansreportedonthe799filedinthesecondquarterwouldnothavetobereportediftheentitysinternalcontrolovercompliancedetectedandcorrected(properlyreclassifiedtheloansandmadeanyadjustmentsaccordingly)thenoncompliancebythetimetheentityfiledthenext799inthethirdquarter. ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ vwxXXX)X>=|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXo @ )X>=XXX|(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xo[X` hp x (#%'0*,.8135@8:<H?AXoӀ)X)X>=N)Seefootnote9herein.NX>=XN)X>=XXNX>= ##))Xd#         dTable_A dTable_BII- * `CG Times  +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ|(Xr hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AXr X{ @ XXX)X>=|(Xr hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AXr X{ @ )X>=XXX|(Xr hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AXr X{Ӏ)X)X>=p)Paragraph39saysfurther:Toobtainsuchanunderstanding,apractitioner  shouldconsiderthefollowing:(a)Laws,regulations,rules,contracts,andgrantsthatpertaintothespecifiedcompliancerequirements,includingpublishedrequirements;(b)Knowledgeaboutthespecifiedrequirementsobtainedthroughpriorengagementsandregulatoryreports;(c)Knowledgeaboutthespecifiedcompliancerequirementsobtainedthroughdiscussionwithappropriateindividualswithintheentity(forexample,thechieffinancialofficer,internalauditors,legalcounsel,complianceofficer,orgrantorcontractadministrators);and(d)Knowledgeaboutthespecifiedcompliancerequirementsobtainedthroughdiscussionswithappropriateindividualsoutsidetheentity(forexample,aregulatororthirdpartyspecialist). ##))Xd#         K +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљo[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)CopiesoftheCodeofFederalRegulationscanbeobtainedbycontacting  theSuperintendentofDocuments,U.S.GovernmentPrintingOffice,WashingtonD.C.20402at(202)5121800oraCompilationofStudentFinancialAidRegulationscanbeobtainedbycalling18004FEDAID.NX>=XN)X>=XXNX>= ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљo[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)CopiesofEDsDearColleagueLettersorClarificationletterscanbe  obtainedby(1)calling18004FEDAIDor(202)4012412or(2)byfaxingrequeststo(202)2050657. ##))Xd#        )m  Z (CG Times Regular  +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљo[X` hp x (#%'0*,.8135@8:<H?AXo @ р @  @  @ o[X` hp x (#%'0*,.8135@8:<H?AXo @ )X)X>=)TheSecretarypaysinterestbenefitsonconsolidatedloansiftheloan  applicationwasreceivedbythelenderonorafterJanuary1,1993butnotlaterthanAugust9,1993,oriftheconsolidationapplicationwasreceivedbythelenderonorafterAugust10,1993andonlyifalloftheunderlyingloans 4 consolidatedaresubsidizedStaffordloans.X>=X)X>=XXX>= ##))Xd#        <9Z &Courier Regular  +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=Xљ=XљXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XX=XљXXX)X>=|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X{[X` hp x (#%'0*,.8135@8:<H?AX4 X{ @ )X>=XXXo[X` hp x (#%'0*,.8135@8:<H?AXoӀ)X)X>=N)PertainstosubsidizedStaffordloansandsomecategoriesof  Consolidatedloans(seeprocedured).Forloansdisbursedon/after10/1/92,regulationsallowlenderstobillEDforinterest,however,oncethelenderknowstheloanisunconsummated,alltheinterestpaidbyEDforthoseloans 4 mustbereturnedtoED.NX>=XN)X>=XXNX>= ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XX=Xљ=XљXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XX=XљkXXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XXkXo[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)SeedefinitioninAppendixC. ##))Xd#          +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo @ XXXX)X>=XXX8)>=)XXdd8 @ @@  ݛ=XљXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XX=Xљ=XљXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XX=XљkXXX)X>=|(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X~[X` hp x (#%'0*,.8135@8:<H?AX4` X~ @ )X>=XXkXo[X` hp x (#%'0*,.8135@8:<H?AXo @ р @ o[X` hp x (#%'0*,.8135@8:<H?AXo)X)X>=N)PertainstoallFFELloans.Forloansdisbursedon/after10/1/92,  regulationsallowlenderstobillEDforspecialallowance,however,oncethelenderknowstheloanisunconsummated,allspecialallowancepaidbyEDfor j thoseloansmustbereturnedtoED. ##))Xd#        STATUS CHANGES!Table_C&0 d dIII- SERVICE REPORTIV- A- B- C- B- ; `(CG TimesScalable  !  =    |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oXXXc=(hH  Z 6Times New Roman Regularc|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oXXXUk)L  Z (CG Times RegularU|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[    e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oe[X` hp x (#%'0*,.8135@8:<H?Ae  р  e[X` hp x (#%'0*,.8135@8:<H?AeӀc=(hH  Z 6Times New Roman RegularcParagraphs54and55ofSSAENo.3explainhowthepractitionershouldreportif,alternatively,managementpresentsitswrittenassertionsinaseparatereport.[N<6X9`(.Courier 10cpiTT TT)[ ##))Xd#          !  =    |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oXXXc=(hH  Z 6Times New Roman Regularc|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oXXXUk)L  Z (CG Times RegularU|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[    e[X` hp x (#%'0*,.8135@8:<H?Ae  XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oe[X` hp x (#%'0*,.8135@8:<H?Ae  р      e[X` hp x (#%'0*,.8135@8:<H?Ae  рc=(hH  Z 6Times New Roman RegularcParagraph61ofSSAENo.3says thepractitionershouldmodify[thestandardreport]ifanyofthefollowingconditionsexists:0..Thereismaterialnoncompliancewithspecifiedrequirements.0..Thereisamatterinvolvingamaterialuncertainty.0..Thereisarestrictiononthescopeoftheengagement.0..Thepractitionerdecidestorefertothereportofanotherpractitionerasthebasis,inpart,forthepractitionersreport.XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)oc=(hH  Z 6Times New Roman RegularcParagraphs62through68ofSSAENo.3givepractitionersguidancewhenanexaminationofmanagementsassertionsaboutanentityscompliancewithspecifiedrequirementsdisclosesmaterialnoncompliance.XXXo)<6X9`(BCourier 10cpiTT T T T T T TT)o ##))Xd#        ) `(CG TimesScalable\ ` = !  =    |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-\ `-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-2`-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[    e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-e[X` hp x (#%'0*,.8135@8:<H?Ae  р    e[X` hp x (#%'0*,.8135@8:<H?Ae-<6X`(-Seefootnote1herein.<6X`( ##Xd#        2`<6X`(*`2*0  !  =    |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-\ `-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-2`-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[    e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-        e[X` hp x (#%'0*,.8135@8:<H?Ae  р-<6X`(-Seefootnote2herein. ##Xd#         > !  =    |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-\ `-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-<6X`(-XXX-2`-|(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[    e[X` hp x (#%'0*,.8135@8:<H?Ae  XXX-2`-  e[X` hp x (#%'0*,.8135@8:<H?Ae    XXX-$\ `-Thepractitionershouldfollowtheguidanceinparagraphs2428ofSSAENo.3,ifconditionsexistwherethereportshouldbemodified. ##Xd#        $\ `Table_DC- )`D- E- F-   (*      |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?AeXXX-<6X`(-XXX-<6X`(-e[X` hp x (#%'0*,.8135@8:<H?AeXXX-<6X`(-e[X` hp x (#%'0*,.8135@8:<H?Aee[X` hp x (#%'0*,.8135@8:<H?Ae&&&-2*0-@..j F    -)`-e[X` hp x (#%'0*,.8135@8:<H?Ae@..f 400MarylandAvenue,S.W.,Washington,D.C.202021510  -'      |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  e[X` hp x (#%'0*,.8135@8:<H?AeXXX-<6X`(-XXX-<6X`(-e[X` hp x (#%'0*,.8135@8:<H?AeXXX-<6X`(-e[X` hp x (#%'0*,.8135@8:<H?Ae   X e[X` hp x (#%'0*,.8135@8:<H?AeXXX-*`-%..  APPENDIXF X -*`-@.. UNITEDSTATESDEPARTMENTOFEDUCATION-2*0-@..officeofinspectorgeneralXXX-*`-dTable_E(!2{$ +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo  XXXX)X>=XXX8)>=)XXdd8    =XљXX)X>=Ҁ  0   CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|w< `(CG TimesScalableXXw P7XP<6X9`(BCourier 10cpiTT T T T T T TT)Xx6X@;X@;`imesScalable T T T TT)O P7P< `(CG TimesScalable T T T TT) P 7P<`imesScalable T T T TT) P 7P< `(CG TimesScalable T T T TT) P7P; `(CG TimesScalablelarTT)&&m Pi7&P\ `s New Roman RegularTT)&&G\  P}&P\ `s New Roman RegularTT)A\  P}P<6X`(s New Roman RegularTT)Xx6X@};X@\ `s New Roman RegularTT)XXN\  P}XP2`s New Roman RegularTT)XX P}7XP<6X`(s New Roman RegularTT)RZ6X@}@*`s New Roman RegularTT)XXw P}7XP2*0s New Roman RegularTT)&&*0 x}7&<6X`(s New Roman RegularTT)&&n6X@}&@2`s New Roman RegularTT)&& P}7&P$\ `s New Roman RegularTT)X*e\  P}XP2`s New Roman RegularTT) P}7P)`s New Roman RegularTT)&&m P}7&P2*0s New Roman RegularTT)XX*0 x}7X*`s New Roman RegularTT) P}7P)`s New Roman RegularTT)c P}7P*`s New Roman RegularTT) P}7P)`s New Roman RegularTT)O P}7P2*0s New Roman RegularTT)*0 x}7*`s New Roman RegularTT) P}7P(&+O$  o[X` hp x (#%'0*,.8135@8:<H?AXo  XXXX)X>=XXX8)>=)XXdd8  ]D#VKY)` GߛU +O!  o[X` hp x (#%'0*,.8135@8:<H?AXo  XXXX)X>=XXX8)>=)XXdd8    ݛ XXX)X>=@XX$December1996     ӢLS9701  DearColleague:ThislettertransmitstheU.S.DepartmentofEducationsAuditGuide,ComplianceAudits 0  (AttestationEngagements)forLendersandLenderServicersParticipatingintheFederalFamilyEducationLoanProgram.ThisguidesupersedestheMarch1995LenderAuditGuide. b  Section428(b)(1)(U)oftheHigherEducationActof1965,asamended,(HEA)andSection682.305(c)ofTitle34oftheCodeofFederalRegulations(CFR)requirealllendersparticipatingintheFederalFamilyEducationLoan(FFEL)Programtohaveanannualcomplianceauditperformedbyanonfederalauditor.AparticipatinglenderisanylenderwhooriginatesorholdsFFELProgramloans.LendersthatparticipateintheFFELProgramfrequentlyengageservicerorganizations(servicers)toperformcertainfunctionsrelatingtotheadministrationofthatprogram.Section487(c)(1)(C)oftheHEAand34CFR682.416(e)requiresservicerstohaveanannualcomplianceauditperformedoftheservicer'sadministrationoftheFFELProgram.Allcomplianceaudits(attestationengagements)conductedtosatisfytheannualcomplianceauditrequirements,exceptforauditsoflendersorservicersthatarenonprofitorgovernmentalorganizations,mustbedoneinaccordancewiththisguide.Lendersorservicersthatarenonprofitorgovernmentalorganizationshavetheoptionofobtaininganaudit(attestationengagement)inaccordancewiththisguideorobtaininganauditinaccordancewiththeOfficeofManagementandBudget(OMB)CircularA133,AuditsofInstitutionsofHigherEducation D andOtherNonprofitInstitutionsandOMBCircularA128,AuditsofStateandLocal 6 Governments,(orsuccessorcirculars),respectively.Howeveritishighlyrecommendedthat  ( auditorsconsultthisGuidetoidentifythecompliancerequirementstobetestedinanA133orA128auditofFFELProgramlendersorservicers.ItshouldbenotedthattheSingleAuditActof1984hasbeenamendedbytheSingleAuditActAmendmentsof1996andiseffectiveforfiscalyearsbeginningafterJune30,1996.ItistheintentionoftheOMBtocombinetheauditrequirementsunderCircularsA133andA128,reviseCircularA133toalsobeapplicabletostateandlocalgovernments,andthenrescindOMBCircularA128. EngagementPeriodsandReportingDeadlines  Z(#& Thefollowingaretheengagementperiodsandrelatedduedatesforthelenderandservicercompliancereports.  ,j'*a Lenders:Thefirstreportsubmissionrequiredtobefiledbyalenderwasforthelendersfirst   fiscalyearthatbeganafterJuly23,1992.Exceptforlenderswhooriginatedand/orheldϢFFELProgramloanstotaling$5millionorless(DearColleagueLetter95L183[September14,1995]),lenderswererequiredtocompleteandsubmittheaudits,ifrequired(seeSubmissionRequirementsbelow),bySeptember30,1995. TheOmnibusConsolidatedAppropriationsActof1997(PublicLaw104208)providingfiscal P  year1997(October1,1996September30,1997)appropriationsfortheDepartmentofEducationincludesaprovisionprohibitingtheDepartmentofEducationfromusingfundsmadeavailableunderthatacttoenforcethelendercomplianceauditrequirementagainstlenderswithloanportfoliosequaltoorlessthan$5million.ThisprovisionoftheappropriationsbilldoesnoteliminatetherequirementthatlenderswiththisvolumeofFFELProgramloanscompleteanannualcomplianceauditforallthefiscalyearssubjecttotheauditrequirement,ratheritsimplydelaysthedatebywhichtheauditsmustbecompleted.InlightofpossiblefurtherlegislativeactionbyCongress,theDepartmentofEducationhasdecidedtoagainpostponethedeadlineforcompletionand,ifnecessary,submissionoftheaudituntilJune30,1998foranyauditperiodinwhichthelenderoriginatedand/orheldFFELProgramloanstotaling$5millionorless.    Subsequentauditsarerequiredannuallyandaretobecompletedandsubmittedtothe  DepartmentofEducationwithinsixmonthsafterthecloseofthelender'sfiscalyear.  p  Servicers:Theservicerauditrequirement(attestationengagement)appliestoanyservicer's P fiscalyearinwhichtheserviceradministeredorservicedanyaspectoftheFFELPrograms.Theimplementingregulation(34CFR682.416)requiresannualservicercomplianceauditsbeginningwiththeservicersfirstfullfiscalyearthatbeganonorafterJuly1,1994.Theinitialauditsdueareofaservicer'sfiscalyear1995.̢ServicerswithfiscalyearsendingJune30throughOctober31havetheoptionofhavinganannualauditforfiscalyears1995and1996oracombinedauditforthetwoyears.TheinitialauditsforservicerswithfiscalyearsendingNovember1throughDecember31arerequiredfortheirfiscalyear1995.TheinitialauditsforservicerswithfiscalyearsendingJanuary1throughJune29arerequiredfortheirfiscalyear1996.TheinitialcomplianceauditreportforallservicersshouldbecompletedandsubmittedtotheDepartmentofEducationbyMay31,1997.̢Servicerswho,priortoissuanceofthisguide,hadindependentpractitionersperformauditsoftheirfiscalyears1995or1996insupportofthelenderauditrequirementmaysubmitthoseauditstoEDasmeetingtheirservicerauditrequirementforthosefiscalyearsprovidedthoseaudits:(1)wereperformedinaccordancewithGovernmentAuditingStandards,issuedbythe @)$' ComptrollerGeneraloftheUnitedStates;standardsestablishedbytheAmericanInstituteofCertifiedPublicAccountants;andtheMarch1995LenderAuditGuide,ComplianceAudits "+r&) (AttestationEngagements)oftheFederalFamilyEducationLoanProgramatParticipating ,d'* LendersissuedbytheU.S.DepartmentofEducation,OfficeofInspectorGeneral,and(2)  addressedallcompliancerequirementsandapplicableassertionscontainedinSectionIIoftheMarch1995LenderAuditGuide.Subsequentannualservicerauditsarerequiredtobecompletedandsubmittedtotheaddressbelowwithinsixmonthsafterthecloseoftheservicer'sfiscalyear. EffectiveDateofthisGuide  2  =XљXXXApplicationofthisguideiseffectiveimmediatelyforserviceraudits.Forlenderaudits,applicationofthisguideiseffectiveforfiscalyearsendingonorafterDecember31,1996.Earlierapplicationispermittedbutnotrequired.XXX=Xљ SubmissionRequirements   ThefollowinglendersandservicersarerequiredtosubmitthefulllenderorservicerreportingpackageidentifiedinSectionIVoftheGuide.1.0  Lendersthatoriginateand/orholdFFELProgramloanstotaling$10millionormorein r afiscalyear (#(# 2.0  OtherlenderswhosereportsidentifyfindingsofnoncomplianceB(#(# 3.0  Allservicers"r(#(# TheselendersorservicersshouldsubmitthefullreportingpackagetotheDepartmentofEducationatthefollowingaddress:0  0` (#(#0 ` (#` (#GuarantorandLenderOversightStaff  (# (# 0  0` (#(#0 ` (#` (#U.S.DepartmentofEducation  (# (# 0  0` (#(#0 ` (#` (#600IndependenceAvenue,SW  (# (# 0  0` (#(#0 ` (#` (#Room4624,ROB3  (# (# 0  0` (#(#0 ` (#` (#Washington,D.C.202025132  (# (# Lendersthatoriginateorholdmorethan$5millionbutlessthan$10millioninFFELProgramloansandwhosereportsdonotdisclosefindingsofnoncompliance,shouldholdthereportsforaperiodoffiveyearsandmustsubmitthemonlyifrequested.TheGuarantorandLenderOversightStaffintendstorequestarandomsampleofthesereportstobesubmitted.Inaddition,thesereportsmayberequestedbystaffperformingprogramreviewsorotheraudit ,b'* worktoassistinplanningsuchworkandtoavoidduplicatingtheworkperformedbythenonfederalauditor.CopiesoftheguidecanbeobtainedbycallingtheFederalStudentAidInformationCenterat18004FEDAID.QuestionspertainingtotheguideshouldbefaxedtotheOfficeofInspectorGeneralat(202)2058238.WelookforwardtoworkingwithyoutoimplementthecomplianceauditrequirementsforFFELProgramlendersandlenderservicers.   `     h   Sincerely,   `     h   ThomasR.Bloom)X>=XXX   H  |(X` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X)]JX)X>=r )]Jh/ r@% AUDITGUIDE 0   COMPLIANCEAUDITS(ATTESTATIONENGAGEMENTS)FORLENDERSANDLENDERϢSERVICERSPARTICIPATINGINTHEFEDERALFAMILYEDUCATIONLOANPROGRAM   ~BDH84xx ` @@E  P~   (#(#  (#(#  @ U.S.DEPARTMENTOFEDUCATION@  OFFICEOFINSPECTORGENERAL@33$DECEMBER1996  -)  t XXh/EXXXX@ Eh/XEXUnitedStatesDepartmentofEducation  @` ` OfficeofInspectorGeneral@E z!Eh/EStaffContributorsToThisGuide $  Er !E zEStaffOfficeofInspectorGeneral  f  EXX ErEStaffTheresaLehr,Washington,D.C.ChristinePress,Washington,D.C.Er XEXEStaffOfficeofStudentFinancialAssistance >  EXX ErEStaffLindaHall,Washington,D.C.PatriciaNewcombe,Washington,D.C.RonStreets,Washington,D.C.PamEliadis,Washington,D.C.TheOfficeofInspectorGeneralalsogratefullyacknowledgestheassistanceandinputprovidedbylendingandservicingcommunities,thepublicaccountingcommunityandstaffoftheAmericanInstituteofCertifiedPublicAccountants.Eh/XEXh/Eh/ *      r h/StaffCONTENTSh/ rStaff  F  0@..@..XXh/StaffSECTIONI  PLANNINGANDOTHERCONSIDERATIONS  PURPOSEOFTHEGUIDE@"@"H(#. I1  @ AUTHORIZATION@"@"H(#.2 2 I1  0   RequiredReports@"@"H(#. I2   USEOFTHISGUIDE@"@"H(#.  I3    ENGAGEMENTSCOPE@"@"H(#. I3     LenderEngagements!!E(#. !I3 t  Ѐ  ServicerEngagements@"@"H(#.#I4 d    ComparisonofInformationinEDForm799@"@"H(#.HH7I6 T  MANAGEMENTRESPONSIBILITIESANDASSERTIONS@"@"H(#.``4I6 D  PRACTITIONERQUALIFICATIONSANDRESPONSIBILITIES@"@"H(#.88:I6 4 REPORTING!!G(#.X X I11 $   ManagementReportingResponsibilities!!G(#.4I11    PractitionerReportingResponsibilities!!G(#.ZZ6I12  SUBMISSIONREQUIREMENTS!!G(#.!I15 p EFFECTIVEDATES,ENGAGEMENTPERIODSANDREPORTINGDEADLINES!!G(#. EI16 `   EffectiveDates!!G(#. I16 P   EngagementPeriodsandReportingDeadlines!!G(#.9I16 @ FUTUREREVISIONS!!G(#.  I17 0   0@..@.. SECTIONII      STANDARDENGAGEMENT t   INTRODUCTION!!G(#. II1 T COMPLIANCEREQUIREMENTS,MANAGEMENTASSERTIONS,ANDSUGGESTEDPROCEDURESFOREXAMININGCOMPLIANCEFORLENDERSANDSERVICERS!!G(#. II2 $"  1.  EDFORM799!!G(#. II2 #! 2.  INDIVIDUALRECORDREVIEW!!G(#.(II4 $ " 3.0  LOANORIGINATIONFEES#!!G(#.%(#(##II6 $p!# 4.0  INTERESTBENEFITS#!!G(#. (#(##II8 %`"$ 5.  SPECIALALLOWANCEPAYMENTS!!G(#.)II9 &P#% 6.  LOANPORTFOLIOANALYSIS!!F(#.  'II11 '@$& 7.0  LOANSALES,PURCHASESANDTRANSFERS#!!F(#.3(#(##II12 (0%' 8.  STUDENTSTATUSCHANGES!!F(#.&II14 ) &( 9.  PAYMENTPROCESSING!!F(#.!II15 *') 10.0  DUEDILIGENCEBYLENDERSORSERVICERSINTHECOLLECTION+(*(#(#   OFDELINQUENTLOANS!!F(#.<<"II16 t,(+ 11.0  DUEDILIGENCETIMELYCLAIMFILINGSBYLENDERSORd-),(#(#   SERVICERS!!F(#.: : II22  12.0  CURES#!!F(#. (#(##II24 t   0@..@.. SECTIONIII T   0  0` (#(#  ALTERNATIVEANDCOMBINEDENGAGEMENTSFORCERTAINLENDERS 4 USINGSERVICERS ` (#` (#  PREREQUISITEFORALTERNATIVE(ORCOMBINED)ENGAGEMENT!!F(#.?III1   ADDITIONALREQUIREMENTS!!F(#.!III1  p    AlternativeEngagement!!F(#.%III1  `    CombinedEngagement!!F(#.nn"III1  P  ТSERVICERAUDIT/ATTESTATIONREPORTREQUIREMENTS!!F(#.jj8III2 @  MANAGEMENTASSERTIONSANDAGREEDUPONPROCEDURES!!F(#.:III3 0  1.  COMPILATIONOFBILLINGINFORMATION!!F(#.1III3   2.0  SERVICEORGANIZATIONAUDIT/ATTESTATIONREPORT#!!F(#.&&<(#(##III4  3.  SERVICERREPORTFINDINGS!!F(#.'III5    0@..@.. SECTIONIV d 0@..0@` ..` @..REPORTING  REPORTINGPACKAGEFORLENDERSANDSERVICERS!!G(#.5IV1 $   RequiredLenderReports!!G(#.&IV1    RequiredServicerReports!!G(#.xx(IV1    RequiredPractitionerReports!!G(#.,IV1 p    APPENDICES  @   0   APPENDIXA (#(# 0  0` (#(#  REGIONALINSPECTORSGENERALFORAUDIT#!!H(#.ff4` (#` (##A1   0   APPENDIXB (#(# 0  0` (#(#  ILLUSTRATIVEINFORMATIONSHEET#""H(#.-` (#` (##B1 d#" 0  0` (#(#  ILLUSTRATIVEREPORTONLENDERMANAGEMENTSASSERTIONS ` (#` (#    ` ABOUTCOMPLIANCEWITHSPECIFIEDFFELPROGRAM̀   ` REQUIREMENTS""H(#.!B3 4&"% 0  0` (#(#  ILLUSTRATIVEREPORTONSERVICERMANAGEMENTSASSERTIONSABOUTCOMPLIANCEWITHANDINTERNALCONTROLOVERCOMPLIANCEWITHSPECIFIEDFFELPROGRAMREQUIREMENTS#""H(#.,,<` (#` (##B4 )%( 0  0` (#(#  ILLUSTRATIVESCHEDULEOFFINDINGSANDQUESTIONEDAMOUNTS ` (#` (#    ` BYCOMPLIANCEREQUIREMENT""H(#.-B5 *`'* 0  0` (#(#  REPORTONAGREEDUPONPROCEDURESATTESTATION ` (#` (#    ` ENGAGEMENTUNDERALTERNATIVEMETHOD""H(#.>>7B6 ,@), Ї0  0` (#(#  ILLUSTRATIVEPRACTITIONER'SCOMMENTSONPRIOR ` (#` (#    ` YEARSAUDIT/EXAMINATIONRESOLUTIONMATTERSRELATING   ` TOTHEFFELPROGRAM""H(#.xx'B7 d 0  0` (#(#  CORRECTIVEACTIONPLAN#""H(#.%` (#` (##B8 T 0   APPENDIXC (#(# 0  0` (#(#  DEFINITIONS#!!H(#. ` (#` (##C1 $  0   APPENDIXD (#(# 0  0` (#(#  LENDERPAYHISTORYSEARCHINSTRUCTIONS#!!H(#.5` (#` (##D1  p  0   APPENDIXE (#(# 0  0` (#(#  HIGHRISKINDICATORS#""H(#.#` (#` (##E1 @  0  0` (#(#  NOTIFICATIONTOSUBMITTERSOFCONFIDENTIALCOMMERCIALINFORMATION# " "H(#.` (#` (##F1    /   HStr XXStaffH@&  SECTIONI N     @[ [  PLANNINGANDOTHERCONSIDERATIONS  0  6OXX r @    PURPOSEOFTHEGUIDE ( x  OThisGuidehelpslenderJ I  1      ׀orlenderservicerO I  2      ף[servicer(s)]managementspreparewrittenassertionsabout  X theentityscompliance(and,forservicers,abouttheentitysinternalcontrolovercompliancewith)specifiedU.S.DepartmentofEducation(ED)FederalFamilyEducationLoan(FFEL)Programrequirements.Italsohelpspractitionersengagedtoexamineandreportonmanagementswrittenassertions.r XX @ XX r @    AUTHORIZATION     8SSection428(b)(1)(U)oftheHigherEducationActof1965,asamended,(HEA)requiresthateachparticipatinglenderhaveacomplianceauditofitsFFELProgram.TheFFELProgram(formerlytheGuaranteedStudentLoanProgram)includestheFederalStaffordLoanProgram,bothsubsidizedandunsubsidized,S8 I  3      ׀theFederalSupplementalLoansforStudents(SLS)Program,theFederalPLUSProgram,  andtheFederalConsolidationLoanProgram.LendersfrequentlyhireservicerstoadministerFFELProgramfunctions.Section487(c)(1)(C)oftheϢHEArequiresannualcomplianceauditsofservicersthatcontractwitheligiblelenderstoadministerorserviceanyaspectoftheStudentFinancialAssistance(SFA)Programs.TheSFAProgramsincludetheϢFFELProgram.Section682.416(e)ofTitle34oftheCodeofFederalRegulations(34CFR),requiresanannualservicercomplianceauditunless:   a.  TheservicercontractswithonlyonelenderW I  4      ;and @   b.0  Theauditofthatlender'sFFELProgramsinvolveseveryaspect[ I  5      ףoftheservicer's   administrationofthoseFFELPrograms. T$T$ Sections428(b)(1)(U)and487(c)(1)(C)oftheHEArequirethattheauditsbeperformedbyaqualified,independentorganizationorpersoninaccordancewiththeU.S.GeneralAccountingOffice's(GAO)GovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates.Theregulations p implementingtheauditrequirementsspecifythatproceduresfortheauditswillbeavailableinanauditguidedevelopedbytheEDOfficeofInspectorGeneral[34CFR682.305(c)(2)(iii)and682.416(e)].  RequiredReports 2    |[AnoverallobjectiveofEDinimplementingthestatutoryandregulatoryauditrequirementsistogainassurancethat:  a.0  theLendersInterestandSpecialAllowanceRequestandReports(EDForm799s)are 2  materiallycorrectandinconformitywithidentifiedlawsandregulations;and$ T$T$   b.0  thelenderorservicerhascompliedwithX @ =XљXXX"X @ XXX=Xљand,asoftheassertiondate,theservicerhas  effectivecontrolovercompliancewithX @ =XљXXX"X @ XXX=Xљtheidentifiedstatutoryandregulatoryprovisions  applicabletoitsparticipationinoradministrationoftheFFELProgram. T$T$ ThereportsrequiredbythisGuideprovideassurancetoEDprogrammanagersthatmanagementsassertionsrelativetothemattersspecifiedinthisGuidearefairlystated,inallmaterialrespects.Thus,theGuideaddressesthestatutoryandregulatoryauditrequirementsbyrequiringanexaminationlevelattestationengagementperformedinaccordancewiththeAmericanInstituteofCertifiedPublicAccountants(AICPAs)StatementonStandardsforAttestationEngagements(SSAE)No.3,Compliance : Attestation(AICPA,ProfessionalStandards,vol.1,ATsec.500),asamended_r I  6      ףandX @ =XљXXXԀthegeneral, ,| fieldwork,andreportingstandardsinX @ XXX=XљGovernmentAuditingStandardsrelativeto:  p   (1)0  thelenderorservicermanagementswrittenassertionsabouttheentityscompliancewith T certainrequirementsinvolvingtheirparticipationinoradministrationoftheFFELProgram; D and 4T$T$   (2)0  theservicermanagementswrittenassertionabouttheeffectivenessofitsinternalcontrol "  structureovercompliancewiththosespecifiedcompliancerequirements.#!T$T$ ЇThisGuiderequirescertainothermanagementandpractitionercommunicationsaspartoftheengagement(seethe Reportingsectionherein).The PractitionerQualificationandResponsibilitiessectionherein  describesthegeneral,fieldwork,andreportingstandardsthatmustbefollowed.$    USEOFTHISGUIDE$!g@     @   BgThisGuidemustbeusedbyalllendersorservicersthatparticipateinoradministeranyaspectoftheϢFFELProgram,withtwoexceptions:  (1)0  LendersorservicersthatmaybecoveredundertheSingleAuditActof1984c I  7      ׀andOfficeof @  ManagementandBudget(OMB)CircularA-128,AuditsofStateandLocalGovernments;and0 T$T$   (2)0  LendersorservicerssatisfyingtheauditrequirementwithanauditinaccordancewithOMB  CircularA-133,AuditsofInstitutionsofHigherEducationandOtherNonprofitInstitutions.   T$T$ Fortheselendersorservicers,thisGuideidentifiestheprogrammaticcompliancerequirementsthatshouldbeaddressedbytheaudit.ThisGuideisdividedintofoursections. SectionI providesgeneralinformationaboutengagementrequirements,addressesthepurposeofthe D Guide,thescopeofrequiredengagements,managementandpractitionerresponsibilities,reporting,effectivedates,examinationperiodsandduedates. SectionII specifiestherequirementsaboutwhichlenderandservicermanagementmustassertcompliance X andsuggests,tothepractitioner,proceduresforexaminingandreportingonmanagementsassertions L ( standardengagement). <  SectionIII explainswhenanalternative(orcombined)engagementmaybeperformedandestablishes ! therequiredassertionsformanagement,agreeduponproceduresforthepractitioner,andothermatters. SectionIV setsforthandillustratesmanagementandpractitionerreportingrequirements. % # $    ENGAGEMENTSCOPE$&o@       Go  LenderEngagements p   oLendersfrequentlyengageservicerstoadministercertainofthelendersFFELProgramfunctions(forexample,managinginitialapplications,disbursements,andloanstatus;preparingEDForm799s;servicingloansinrepayment;orotherservices).Thenatureofmanagementswrittenassertionsand,thus,thescopeofalenderengagement,willvarydependingX @ =XљXXXwhether"X @ XXX=XљԀ  p    (1)0  ThefunctionsaddressedbyassertionsinSectionIIofthisGuidearecarriedoutinwholeor R  inpartbyoneormoreservicers;andB T$T$   (2)0  Theservicer(s)obtainsandprovidesanaudit/attestationreportthatmeetscertainrequirements $  identifiedinSectionIII. T$T$ ManagementshoulddeterminewhethertheentityperformsthefunctionsaddressedinSectionII,whetheritcanmakeallorpartoftherequiredmanagementassertions,andwhichofthefollowingengagementsisrequired. <0   $    StandardEngagement $tman   ݀Whenthelenderservicesall,orallexceptanimmaterialpart,ofitsown d ТFFELProgramloanportfolio,lendermanagementmustmakealloftheapplicableassertionsrequiredinSectionIIofthisGuideandastandard(examinationlevel)engagementshouldbeperformed. T$T$  <0   $    AlternativeEngagement $vman   WhenallofthelendersFFELProgramloanportfolioisservicedbyone &v ormoreservicersandthelenderelectstousethealternativeengagement,thelendersmanagementisrequiredtomaketheassertionscontainedinSectionIII,ratherthanthoseinSectionII,inwhichcasemanagementisrequiredtoengageapractitionertoperformanagreeduponproceduresattestationengagement. T$T$  <0   CombinedEngagement󀄀WhenpartoftheFFELProgramloanportfolioisservicedbythelenderand ! partisservicedbyoneormoreservicersandthelenderelectstousethecombinedengagement,thelendersmanagementisrequiredtomaketheapplicableassertionsinSectionIIandtheadditional #! assertionsinSectionIII.Managementisrequiredtoengagethepractitionertoperformthestandard(examinationlevel)engagementontheSectionIIassertionsandtheagreeduponproceduresengagementrequiredbySectionIII. T$T$ MultipleLendersorLenderIDs.SomelenderssubmitinformationtoEDundermultiplelenderIDs. \(#& ThisGuideallowsmanagementtosubmitseparatereportsforeachlenderIDortocombineitslenderIDsintooneormorereports.Similarly,lendersthatissueconsolidatedfinancialstatementsmaycombinelenderIDsintooneormorereports.However,managementswrittenassertions(and,thus,the practitionersreport)mustincludealllendersandlenderIDsthateitherheldororiginatedloansduring ,n'* theyear.AcompletelistingoflenderIDscoveredbytheassertionsmustbeprovidedinthereportsubmission.   ԢServicerEngagements   2~ Ifaservicerdoesnotperform,foritslenderclient,allofthefunctionsaddressedbyasingleassertion, `  thatassertionmaybemodifiedbutmustclearlydistinguishresponsibilitiesofthelenderandtheservicersothattheirrespectivewrittenassertionsaddressonlythefunctionseachperforms.  ContractingWithMoreThanOneLender.Servicersgenerallyperformdifferentservicesfordifferent  p  lenders.ThisGuideallowsaservicerwithmorethanonelenderclienttosubmitasingle,organizationwidereportthatcoverseachcompliancefunctionaddressedinSectionIIforeachlenderiftheservicer R  managementswrittenassertionsoutlinethecompliancefunctionstheservicerperformsforeachofitsclients.ServicersInternalControlOverCompliance.Inadditiontoexaminingtheservicermanagements  assertionsaboutthespecifiedcompliancerequirementsspecifiedinSectionII,thisGuidealsorequiresthatservicermanagementengagethepractitionertoexamineandreportontheservicermanagementsassertionabouttheeffectivenessoftheservicersinternalcontrolovercompliancewiththosespecifiedcompliancerequirements(internalcontrolassertion)inaccordancewiththeAICPAsStatementonStandardsforAttestationEngagements(SSAE)No.3,ComplianceAttestation(AICPA,Professional v Standards,vol.1,ATsec.500),asamended;thegeneral,fieldworkandreportingstandardsin h GovernmentAuditingStandards;andthisGuide.Managementandpractitionersshouldbeawarethatthe Z requiredassertionsandaccompanyingreportoninternalcontrolovercompliancerequiredinthisGuidediffersfromandisnotasubstituteforareportissuedunderAICPAStatementonAuditingStandards(SAS)No.70,ReportsontheProcessingofTransactionsbyServiceOrganizations(AICPA,Professional ,| Standards,vol.1,AUsec.324). n ReportingCriteria.Managementisresponsiblefortheeffectivenessoftheservicersinternalcontrolover P compliancewiththespecifiedrequirementsandforevaluatingitseffectivenessusingreasonablecriteria.Asdiscussedinparagraph6ofSSAENo.3,practitionersareallowedtoacceptanengagementtoexaminemanagementsassertionabouttheeffectivenessoftheservicersinternalcontrolovercomplianceonlyifmanagementusesreasonablecriteria.ThisGuiderecognizesInternalControlXgrammanag=XљXXX"XgrammanagXXX=XљIntegrated "  FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO) #! asreasonablecriteriaformanagementsinternalcontrolassertionandrelatedpractitionerreporting.PractitionersengagedtoexamineaservicermanagementsassertionabouttheeffectivenessoftheϢservicersinternalcontrolovercompliancewiththespecifiedcompliancerequirementsidentifiedinSectionIIofthisGuidearerequiredtoobtainanunderstandingoftherelevantportionsoftheservicersinternalcontrolovercomplianceandtotestandevaluatethedesignandoperatingeffectivenessoftheϢservicersinternalcontrolovercompliancewiththespecifiedcompliancerequirements.Paragraph6ofϢSSAENo.3saysSSAENo.2,ReportingonanEntitysInternalControlStructureOverFinancial 8+&) Reporting(AICPA,ProfessionalStandards,vol.1,AT400),maybehelpfultoapractitionerengaged *,z'* toexaminemanagementsinternalcontrolassertion. -l(+ ЇSeverityofControlDeficiencies.Asinternalcontrolsvaryamongservicers,thisGuidedoesnotprovide  suggestedproceduresfortestingthedesignandoperatingeffectivenessoftheservicersinternalcontrolovercompliancewiththespecifiedrequirements.AservicershouldhaveinternalcontrolthatgivestheϢservicerreasonableassurancethatitiscomplyingwiththespecifiedcompliancerequirementsidentifiedinSectionIIofthisGuide.Forpurposesofmanagementandpractitionerreporting,theseverityofcontroldeficienciesrelatestowhethertheservicersinternalcontrolXgrammanag=XљXXXԀprovidesreasonableassuranceof b  materialcompliancewiththespecifiedrequirements.Adeficiencyinwhichtheservicersinternalcontrolovercompliancefailstoprovidereasonableassuranceofmaterialcompliancewiththespecifiedrequirementsshouldbeconsideredasignificantdeficiency.Thesubsection Materialityhereindiscusses 4  materialityofnoncompliance.XgrammanagXXX=Xљ  $   XgrammanaggXXXX  ComparisonofInformationinEDForm799  T   NTheEDForm799srequiredtobetestedmustbecopiesoftheEDForm799ssubmittedbythelender[servicer]andprocessedbyED.Accordingly,aspartoftheengagementplanning,theinformationinpartsII,IIIandIVoftheEDForm799stobetestedshouldbecomparedtoinformationintheLenderPayHistorySearchreportforeachquarter.AppendixDexplainshowtoobtaintheLenderPayHistorySearchreport.[Note:BecauseEDForm799sarerequiredtobesubmittedtoEDaftertheendofeachquarter,theperiodofloanactivitycoveredbytheattestationengagementthatis,loanactivityreportedinEDForm799ssubmittedduringthelendersfiscalyearwillnotbethesameasthelendersfullfiscal  yearactivity.]XgrammanagXXXgXԀ  V   MANAGEMENTRESPONSIBILITIESANDASSERTIONS  F  "AmongothermanagementresponsibilitiesdiscussedinthisGuide,managementisresponsibleforXgrammanag=XљXXX:XgrammanagXXX=Xљ &v   a.0  identifyingtheapplicablecompliancerequirements,XT$T$   b.0  establishingandmaintainingeffectiveinternalcontrolovercompliance,8T$T$ ̀  c.0  evaluatingandmonitoringcomplianceandtheeffectivenessofinternalcontrolover ! compliance, T$T$ 0  d.0T$T$providingthepractitionerwithassertion(s)aboutthelendersorservicerscompliancewith $" thespecifiedcompliancerequirementsandtheeffectivenessoftheservicersinternalcontrolstructureovercompliance,and T$T$   e.0  providingthepractitionerwiththeirwrittenrepresentationsaboutXgrammanag=XљXXXԀallothermattersinparagraph X(#& 70ofSSAENo.3. T$T$ XgrammanagXXX=XљManagementrefusaltoprovidethepractitionerwiththerequiredassertionsmaysubjecttheentitytoadministrativeactionsbyED.  -Z(+ Ї   PRACTITIONERQUALIFICATIONSANDRESPONSIBILITIES    DXgrammanag=XљXXXFollowingisadiscussionofthestandardspractitionersmustfollowandguidanceonapplyingthose  standardsintheengagementsrequiredbythisGuide.XgrammanagXXX=XљQualificationsandGeneralStandards.Sections428(b)(1)(U)and487(c)(1)(C)oftheHEArequirethat `  theFFELProgramcomplianceauditsofeachlenderandservicerbeconductedbyaqualified,independentorganizationorpersoninaccordancewithstandardsestablishedbytheComptrollerGeneral.ThisGuiderequiresthattheengagementbeperformedbyacertifiedpublicaccountant( practitioner) 2  thatmeetsthegeneralstandardsofqualification,independence,dueprofessionalcareandqualitycontrolcontainedinChapter3ofGovernmentAuditingStandards,includingtherequirementsrelatingto b  continuingprofessionaleducation.Inpart,thosestandardsrequirethatpractitionersandauditfirmscomplywiththeapplicableprovisionsofthepublicaccountancylawsandrulesofthejurisdictionsinwhichtheyarelicensedandwheretheengagementisbeingconducted.Ifthelenderorservicerislocatedinastateoutsidethehomestateofthepractitioner,andthepractitionerperformssubstantialfieldworkinthelender'sorservicersstate,thisGuiderequiresthepractitionerdocumenthisorhercompliancewiththelicensingrequirementsofthepublicaccountancylawsofthatstate.ThisGuidedoesnotimposeadditionallicensingrequirementsbeyondthoseestablishedbytheindividualStateBoardsofAccountancy.Internalauditorsofalender[servicer]arenotindependentoftheentitywhileauditingwithinitand,therefore,theycannotperformthemajorityoffieldworkandtheirreportscannotsatisfythereportingrequirementsofthisGuide.ForexaminationlevelengagementXgrammanag=XљXXXs"XgrammanagXXX=Xљlikethestandardengagementdiscussed d inSectionIIofthisGuideXgrammanag=XљXXX"XgrammanagXXX=Xљparagraph43ofSSAENo.3saysapractitionershouldconsidertheguidance V inStatementonAuditingStandards(SAS)No.65,TheAuditorsConsiderationoftheInternalAudit H FunctioninanAuditofFinancialStatements(AICPA,ProfessionalStandards,vol.1,AUsec322), :  whenaddressingthecompetenceandobjectivityofinternalauditors,thenature,timing,andextentof ,| worktobeperformed,andotherrelatedmatters.Inaccordancewithparagraphs24and25ofSSAENo. l 4,theagreeduponproceduresrequiredbythealternativeorcombinedengagementdiscussedinSectionIIImustbeperformedentirelybytheindependentpractitioner.FieldworkandReportingStandards.ThisGuiderequiresthepractitionertofollowthefieldworkand  , reportingstandardsforfinancialrelatedauditscontainedinChapters4and5,respectively,oftheGovernmentAuditingStandards,andtoperformandreportontheengagementinaccordancewithSSAE "  No.3.FailuretofollowstandardsmayresultinareferraltotheAICPAandthecognizantStateBoardofAccountancyandanactiontoprohibitthepractitionerfrombeingengagedtofulfillfederalprogramreportingrequirements.(Seealsothe EngagementQualitysubsectionherein). % #  EngagementScope.Asdiscussedinthe EngagementScopesectionherein,thenatureofthelenderor r'"% Тservicermanagementswrittenassertionsandthescopeofthepractitionersengagementmayvaryifthelendercontractswithservicers. Allapplicableassertions requiredofmanagementbythisGuidemust T)$' beaddressedbythepractitionersreport.  8+&)  EngagementLetter.ThisGuiderequiresthatthepractitionerpreparealetterofengagementto  communicatetothelenderorservicerthenatureoftheexaminationlevelattestationengagement.Thelettermustinclude,ataminimum,thefollowing:   a.0  Astatementthattheengagementistobeperformedinaccordancewiththegeneral,fieldwork, r andreportingstandardscontainedinGovernmentAuditingStandards,theAmericanInstitute b  ofCertifiedPublicAccountants(AICPAs)StatementonStandardsforAttestationEngagements(SSAE)No.3,ComplianceAttestation,asamendedandthisGuide.D T$T$   b.0  Adescriptionofthescopeoftheengagementandrelatedreportingthatmeetstherequirements & v  ofthisGuide. T$T$   c.0  AstatementthatbothpartiesunderstandthattheU.S.DepartmentofEducationintendstouse F  thepractitioner'sreporttohelpcarryoutitsresponsibilitiesforoversightoftheFFELProgram. T$T$   d.0  AprovisionthatthepractitionerisrequiredtoprovidetheSecretaryofEducation,theED  InspectorGeneral,andtheGAO,ortheirrepresentatives,accesstoworkingpapersorrelateddocumentstoreviewtheengagement.Accesstoworkingpapersincludesmakingnecessaryphotocopies.PractitionerscanrefertoInterpretationNo.2ofSASNo.41,WorkingPapers,  titled providingAccesstoorPhotocopiesofWorkingPaperstoaRegulator(AICPA, x ProfessionalStandards,vol.1,AUsec9339)forguidance.InformationregardingconfidentialcommercialinformationthatmaybecontainedinworkingpapersandFreedomofInformationActdisclosureisprovidedinthe WorkingPaperssubsectionhereinandinAppendixF.HT$T$ Althoughnotamandatoryrequirement,thisGuidesuggeststhatpractitionersalsoincludeastatementin *z theengagementletterthatdescribesthepractitionersresponsibilitytocommunicateandreportfraudulentactsorindicationsofsuchactsdirectlytotheEDOfficeofInspectorGeneral.ObtainingManagementRepresentations.XServi=XљXXXԀParagraph11aofSSAENo.3says,inpart,apractitionermay : performanexaminationengagementifmanagementmakeswrittenassertionsabouttheentityscompliancewiththespecifiedrequirements.XServiXXX=XљԀManagement'swrittenassertionsarethebasisforthepractitioner's ! testingand,therefore,areanintegralpartoftheengagement.XServi=XљXXXԀThenatureofthewrittenassertionsmade "  bythelenderorservicermanagement(and,thus,thescopeofthepractitionersengagement)mayvarydependingontheextenttowhichalenderhascontractedwiththeservicertoperformcertaincompliancefunctions.BecauselendersandservicersarenotrequiredtomakesuchspecificwrittenassertionstoED,suchassertionsshouldbeobtainedfrommanagementinarepresentationlettertothepractitioner.InadditiontothespecificassertionsidentifiedintheGuide,asapplicable,managementmustalsoprovide,intheletter,writtenrepresentationsaboutthemattersinparagraph70ofSSAENo.3. ThisGuiderequires b(#& thatmanagementprovideallwrittenassertionsandrepresentationsrequiredbytheGuide .If R)$' managementomitsanyoftherequiredassertionsorrepresentations,thepractitionershouldconsidertheguidanceofparagraphs61and71ofSSAENo.3aboutrestrictionsonthescopeoftheengagement. XServiXXX=Xљ ",r'* InherentRisk.XServi=XљXXXParagraph32ofSSAENo.3requiresthat,inassessinginherentrisk,thepractitioner should   considerfactorsrelevanttocomplianceengagements,suchas...priorexperiencewiththeentityscompliance[and]thepotentialimpactofnoncompliance.Inaddition,paragraph48ofSSAENo.3saysthatforengagementsinvolvingcompliancewithregulatoryrequirements, thepractitionersproceduresshouldincludereviewingreportsofsignificantexaminationsandrelatedcommunicationsbetweenregulatoryagenciesandtheentityand,whenappropriate,makinginquiriesoftheregulatoryagencies,includinginquiriesaboutexaminationsinprogress.Accordingly,thisGuiderequiresthepractitionertoconsiderknownmaterialfindingsandrecommendationsandmaterialnoncomplianceidentifiedinprioraudits,guarantyagencyreviews,andEDprogramreviewsrelatedtotheFFELProgram.(Seealsothe FollowuponAuditResolutionMatterssubsectionherein.)XServiXXX=Xљ $ t  MattersRequiringImmediateAction h .ThisGuiderequirespractitionerstodesignandperformprocedures T  toprovidereasonableassuranceofdetectingsignificantillegalactsandtoreportdirectlytotheEDOfficeofInspectorGeneralanyfraudulentactorindicationofsuchacts.XServi=XљXXXInaddition,paragraph30ofSSAENo. 6  3saysthatanexaminationlevelengagementincludes designingtheexaminationtodetectbothintentionalandunintentionalnoncompliancethatismaterialtomanagementsassertion.XServiXXX=XљԀAccordingly,practitioners  shouldbeawareoffraudorhighriskareasandrecognizebasicweaknessesininternalcontrols.SeeAppendixEforalistofhighriskindicatorsorconditionsapractitionermayencounterwhileperformingthecomplianceengagement.AsdescribedinParagraph4.16ofGovernmentAuditingStandards,ifthepractitionerbecomesawareof z fraudorindicationsoffraud,thepractitionershouldexercisedueprofessionalcaretoavoidanyactionsthatwouldcompromisetheprotectionofanindividual'srightsandtheintegrityofanyofficialinquiries.UpondiscoveryofafraudulentactorindicationofsuchanactrelatedtoFederalprograms,thisGuiderequiresthepractitionertoimmediatelycontacttheEDOfficeofInspectorGeneral,InvestigationServices,byphoneorfaxonthenumbersshowninAppendixAbeforeextendingauditstepsandprocedures.Inaddition,thepractitionermustpromptlyprepareaseparatewrittenreportconcerningfraudulentactsorindicationsofsuchactsandincludeallinformationdescribedinSectionIVonreportingfindings.ThisreportshouldbesubmittedtotheEDOfficeofInspectorGeneral,InvestigationServices,within30daysafterthedateofdiscoveryoftheactorwithinthetimeframeagreedtobythepractitionerandtheEDOfficeofInspectorGeneral,InvestigationServices.ThepractitionershallsubmitthisreporttotheAssistantInspectorGeneralforInvestigationsattheaddressshowninAppendixA.AspractitionersarerequiredtoreportfraudulentactsorindicationsofsuchactsdirectlytotheEDOfficeofInspectorGeneral,thisGuidesuggeststhatpractitionersincludeastatementintheengagementletterthatdescribesthepractitionersresponsibilitytocommunicateandreportonsuchacts.Forsupplementalguidance,seeChapters4and5ofGovernmentAuditingStandards.Inaddition, l'"% practitionersmaywishtoconsultSASNo.53,TheAuditor'sResponsibilitytoDetectandReportErrors ^(#& orIrregularities,andSASNo.54,IllegalActsbyClients(AICPA,ProfessionalStandards,vol.1,AU P)$' sec.317).Materiality.Management'sassertionsrelatetoeachofthespecifiedcompliancemattersinSectionIIof ",r'* thisGuide.Inpart,thepractitionershouldconsiderthematerialityofmanagement'sassertionsinthe -d(+ contextofthemagnitudeofloanoriginationfees,totalinterest,ortotalspecialallowanceearnedduringtheyearortheportfoliobalancesattheendoftheyearasseparatelyreportedintheEDForm799andifapplicableforservicerengagements,inrelationtoeachoftheindividualservicesperformedbytheserviceorganization.Materialityforpurposesofcomplianceassertionsdiffersfrommaterialityforfinancialreportingpurposes.Accordingly,materialityrelatestoeachseparatemanagementassertionaboutcompliance.Paragraph35ofSSAENo.3providesguidanceonthepractitioner'sconsiderationofmateriality.  XServi=XљXXXThisGuiderequiresasupplementalreportofallservicernoncomplianceandallnoncomplianceidentified 0  intheagreeduponproceduresengagements"regardlessofmateriality"titled ScheduleofFindingsandQuestionedAmountsbyComplianceRequirement(seethe Reportingsectionherein).DueCareandProfessionalSkepticism.Paragraph3.26ofGovernmentAuditingStandardsstatesthatdue @  professionalcareshouldbeusedinconductingtheauditandinpreparingrelatedreports.Paragraph37ofϢSSAENo.3requiresthatthepractitioner exercise(a)duecareinplanning,performing,andevaluatingthe   resultsofhisorherexaminationproceduresand(b)theproperdegreeofprofessionalskepticismtoachieve  reasonableassurancethatmaterialnoncompliancewillbedetected.ThisGuidecautionspractitionersagainstignoringbasicweaknessesininternalcontrols,performingauditstepsmechanically(auditingformoversubstance),andacceptingexplanationforauditexceptionswithoutquestion.XncewithsXXX=Xљ  ConsiderationofInternalControl.Xncewiths=XљXXXParagraphs4446ofSSAENo.3provideguidanceontheconsideration p ofinternalcontrolovercomplianceinanexaminationlevelattestationengagement.Paragraph44ofSSAENo.3says thepractitionershouldobtainanunderstandingofrelevantportionsoftheinternalcontrolstructureovercompliancesufficienttoplantheengagementandtoassesscontrolriskforcompliancewiththespecifiedrequirements,whichforthisengagementarespecifiedinSectionIIofthisGuide.Thedocumentationrequirementsreferredtointhesubsection WorkingPapershereinapplyequallytothe $t practitionersconsiderationofthelendersorservicersinternalcontrolovercomplianceandassessmentofcontrolrisk.Therefore,XncewithsXXX=Xљthepractitionermustdocumenthisorherconsiderationofthelender'sor T Тservicersinternalcontrolovercomplianceandassessmentofcontrolriskintheworkingpapers.  Xncewiths=XљXXXObtainingSufficientEvidenceandSampling.TheexaminationproceduressuggestedinthisGuidearenot  & allofthosethatthepractitionermaydeterminearenecessarytoprovidereasonableassuranceofdetectingmaterialnoncompliance,noraretheyintendedtosupplantthepractitionersjudgementoftheworkrequired.Suggestedproceduresdescribedmaynotcoverallcircumstancesorconditionsencountered.Practitionersshouldrefertoguidanceabout ObtainingSufficientEvidenceinparagraphs47and48ofSSAENo.3.Further,asinternalcontrolsvaryamongservicers,theGuidedoesnotsuggestproceduresforanexaminationofaservicermanagementsassertionabouttheservicersinternalcontrolovercompliancewiththespecifiedrequirements.XncewithsiXXX=XљAlthoughthisGuiderequiresnospecificorminimumsamplesizeorsamplingmethodology,itdoesrequiresamplesbeselectedinsuchawaytoberepresentativeofthepopulationandperiodunderaudit(inthecaseofservicers,alsorepresentativeofthelenderclientsservicedandthefunctionsperformed bytheservicerforthoselenderclientsthatarecontainedinthecompliancerequirementtested).Paragraph ,f'* 47ofSSAENo.3suggeststhat,inexaminationlevelengagements,practitionersconsidertheguidanceintheAICPAsProfessionalStandards,vol.1,AUsec.350,AuditSampling.   XncewithsXXXiX  WorkingPapers.Xncewiths=XљXXXParagraphs71through75ofSSAENo.1,AttestationStandards(AICPA,Professional  Standards,vol.1,ATsec.100),andparagraphs4.34through4.38ofGovernmentAuditingStandards v addressworkingpapers.SSAENo.1paragraph71saysworkingpapers ordinarilyshouldindicatethat(a) f  theworkwasadequatelyplannedandsupervisedandthat(b)evidentialmatterwasobtainedtoprovidea V  reasonablebasisfortheconclusionorconclusionsexpressedinthepractitionersreport.Paragraph4.35ofGovernmentAuditingStandardssayfurtherthatthepractitionersworkingpapersshould contain 6  sufficientinformationtoenableanexperiencedauditorhavingnopreviousconnectionwiththeaudittoascertainfromthemtheevidencethatsupportstheauditorssignificantconclusionsandjudgements.XncewithsXXX=XљLenders,servicersorpractitionerswhodeemanyoftheworkingpaperinformationtobe"confidential F  commercialinformation"shouldtakeappropriatestepstosodesignatethatinformation.Suchdesignationmayprotectitsconfidentialityif,atafuturepointoftime,arequestismadefordisclosureofthisinformationundertheFreedomofInformationAct(FOIA)."Confidentialcommercialinformation"meansrecordsthatmaycontainmaterialexemptfromreleaseunderExemption4oftheFOIA(pertainingtotradesecretsandcommercialorfinancialinformationthatisprivilegedorconfidential)becausedisclosurecouldreasonablybeexpectedtocausesubstantialcompetitiveharm.Furtherinformation  regardingthedesignationofsuchdocumentsandEDOfficeofInspectorGeneralproceduresuponreceiptofanFOIArequestarecontainedinAppendixF.EngagementQuality.TheEDOfficeofInspectorGeneralhasimplementedproceduresforevaluating V workperformedbynon-Federalpractitioners.Aspartofthisevaluation,thepractitionershallmakeworkingpapersavailableuponrequesttothecognizantRegionalInspectorGeneralforAudit(RIGA)[seeAppendixA]orotherrepresentativesoftheSecretary.Tofacilitatetheserequests,themanagementsreportingpackageshouldincludeaninformationsheetidentifyingthename,address,andtelephonenumberofthepartnerontheengagement(seeAppendixB,Example1).Workingpaperreviewswillnormallytakeplaceatthepractitioner'soffice.Wheneveranevaluationofareportorworkingpapersdisclosesinadequacies,thepractitionermaybeaskedtotakecorrectiveaction.IfEDdeterminesthatthereportandworkingpapersaresubstandardorcontainsignificantinadequacies,referraltotheAICPAandthecognizantStateBoardofAccountancywillbeconsidered.EDmayalsoinitiateactiontodebarthepractitionerfromfurtherparticipationinFederalprograms.Inaddition,certainStateBoardsofAccountancyhaverequestedthattheEDOfficeofInspectorGeneralsendthemcopiesofcorrespondencedetailingdeficienciesnotedduringitsreviews.Thisincludesthelicensee'shomestateandthestate(s)wheretheengagementwasconducted,ifdifferent.Thisisforinformationonlyandisnotareferralfordisciplinaryaction.NotificationtotheStateBoardisconcurrentwithnotificationtothelicensee. $ntt   ݀$    (+x&)   REPORTING$ntt    -X(+  ManagementsassertionsandtheindependentaccountantsreportsissuedpursuanttothisGuideareaprimarytoolusedbyprogrammanagersinmeetingtheirstewardshipresponsibilitiesinoverseeingtheseloanprogramsandassuringtheintegrityofthefundsandthereportingprocess.TheareasofnoncompliancenotedinmanagementsassertionsandtheindependentaccountantsreportsmustbeacteduponbyEDprogrammanagers.Tobeofvalue,thesereportsmustcontainadequateinformationtogivereportedmattersperspectiveandtoallowthemanagerstotakenecessarycorrectiveaction.   ManagementReportingResponsibilities  0   ManagementAssertions.Ifthelenderorservicerdidnotmateriallycomplywithoneormoreofthe `  compliancerequirements,managementshouldmodifyitsassertionstodisclosethenoncompliance.EffectsofWaivers.XlevanttojXXXXIncertaininstancestheSecretarygrantswaiversofspecificcompliancerequirements 2  duetoextenuatingcircumstances(e.g.,naturaldisasters,etc.).Thesewaiversdeemtheholderofthecoveredloansharmlessforfailingtocomplywithprescribedcompliancerequirementsandoftenimposeconditionsorlimitationsforthewaivertoapply.XlevanttoXXXjXԀIfawaiverexists,managementneednotassessits  compliancewiththewaivedrequirements.However,managementshoulddiscloseanyexistingwaiversinitsrepresentationlettertothepractitionerandshouldmodifyitswrittenassertionsbyappendingtheparenthetical (givingeffecttoapplicablewaivers)tothephrase compliedwithineachof  managementsaffectedwrittenassertions.CorrectiveActionPlan.TohelpEDresolvenoncomplianceanddeficienciesininternalcontrolover T compliance,alenderorservicermustdevelopandsubmitacorrectiveactionplan.ThecorrectiveactionplanisanessentialpartofthereportrequirementfortheFFELProgram,ispreparedbythelenderorϢservicermanagementandpresentedontheentitysletterheadandincludesthename,title,andtelephonenumberoftheresponsiblelenderorservicerofficial.Intheplan,management:  a.0  Describethecorrectiveactiontakenorplannedinresponsetofindingsidentifiedinthe F practitionersreport;and6T$T$   b.0  Commentonthestatusofcorrectiveactiontakenonthepriortwoyearsfindingsforall ! audits,programreviewsandguarantyagencyreviews. T$T$ SeeAppendixBExample7forasuggestedplanformat.  Xlevantto=XљXXXCommunicationtoLenders.Whenalenderchoosestousethealternativeorcombinedengagementmethod, x&!$ thelendersmanagementshouldarrangewiththeservicersmanagementtoobtain:(a)acopyofthereportonthepractitionersexaminationoftheservicersmanagementswrittenassertions,and(b)(i)acopyofeachoftheapplicableservicers ScheduleofFindingsandQuestionedAmountsbyComplianceRequirementpreparedbythepractitionerrelatedtotheFFELProgramcompliancerequirementfunctionsthelenderhadcontractedtheservicertoperform;or(ii)aseparatecommunicationfromtheservicermanagementtothe lenderstatingtherewerenofindingsrelatedtoanyoftheFFELProgramcompliancefunctionsforwhich ,h'* thelenderhascontractedtheservicertoperform.Theseparatecommunicationfromtheservicermanagementtothatlendercanbeattachedtothereport.XlevanttogXXX=XљԀ   XlevanttoXXXgX   XlevanttokXXXXPractitionerReportingResponsibilities  p  Xlevantto=XљXXkXAttestationReports.XlevanttoXXX=XљParagraphs6169ofSSAENo.3provideoverallguidanceonreportmodification. R  Xlevantto=XљXXXInpart,paragraph61ofSSAENo.3saysthepractitionershouldmodifyhisorherreportif thereismaterial D  noncompliancewiththespecifiedrequirements.XlevanttoXXX=XљParagraph63ofSSAENo.3says, ifmanagement 4  disclosesthenoncomplianceandappropriatelymodifiesitsassertionabouttheentity'scompliancewiththespecifiedrequirements,thepractitionershouldmodifytheopinionparagraphbyincludingareferencetothenoncomplianceandaddanexplanatoryparagraph(aftertheopinionparagraph)thatemphasizesthenoncompliance.Xlevantto=XљXXXԀParagraph27ofSSAENo.4requiresthatapractitioner reportallfindingsfrom F  applicationofagreeduponproceduresregardlessofmateriality.OtherrequirementsforreportingfindingsofagreeduponproceduresaresetforthinSectionIV.ControlDeficiencies.XlevanttoXXX=Xљ  ForLenders:Althoughlendermanagementsarenotcurrentlyrequiredtomakespecificassertionsabout  orengageapractitionertoexamineandreportonthelendermanagementsassertionsabouttheeffectivenessofthelendersinternalcontrolovercompliance,thepractitionerexaminingthelendermanagementsassertionsaboutthecompliancerequirementsidentifiedinthisGuidemaybecomeawareofsignificantdeficienciesinthelender'sinternalcontrolovercompliance.(Forexample,inadditiontowhenapractitionerperformsprocedurestotestmanagementsassertionsaboutcompliance,significantdeficienciesinthelendersinternalcontrolovercompliancemaycometothepractitionersattentionwhen(a)reviewingprioraudits,guarantyagencyreviewsorprogramreviewsrelatedtotheFFELProgram;or(b)whenthepractitionerperformsprocedurestogainanunderstandingofthelendersinternalcontrolovercompliance.)Xlevantto=XљXXX j Paragraph46ofSSAENo.3saysthatapractitionersresponsibilitytocommunicatethesedeficienciesinanexaminationofmanagementsassertionaboutanentityscompliancewithspecifiedrequirementsissimilartotheauditorsresponsibilitydescribedinSASNo.60,CommunicationofInternalControl  * StructureRelatedMattersNotedinanAudit(AICPA,ProfessionalStandards,vol.1,AUsec.325). ! HXlevanttoXXX=Xљowever,thisGuiderequiresallcommunicationsofsignificantdeficienciestobeinwriting.Therefore, "   ifduringtheexaminationlevelengagementthepractitionerbecomesawareofsignificantdeficienciesinthelendersinternalcontrolovercompliance,thisGuiderequiresthepractitionertoprovideacopyofanywrittenreportorcommunicationfromthepractitionertothelenderinthepractitionersreportingpackage.(SeeSectionIV, RequiredPractitionersReports.) |&!$ Xlevantto=XљXXXForServicers:XlevanttoXXX=XљԀServicermanagementsarerequiredtoengageapractitionertoexamineandreportonthe \(#& Тservicermanagementsassertionsabouttheeffectivenessoftheservicersinternalcontrolovercompliancewiththespecifiedcompliancerequirements.Xlevantto=XљXXXԀIftheexaminationofservicermanagementsinternalcontrol >*%( assertionsdiscloseconditionsthat,individuallyorincombination,resultinoneormoresignificantdeficiencies,thepractitionershouldmodifythereportusinganapproachsimilartothatsuggestedinparagraphs5153ofSSAENo.2forreportingofmaterialweaknessesininternalcontroloverfinancial -`(+ reporting.SeeExample3inSectionIV,AppendixBforanillustrativepractitionersreportontheservicermanagementsassertionabouttheeffectivenessoftheservicersinternalcontrolovercompliancewiththespecifiedrequirements. ScheduleofFindingsandQuestionsAmountsbyComplianceRequirement.ThisGuiderequiresa p supplementalschedule(s)ofnoncompliancetitled ScheduleofFindingsandQuestionedAmountsbyComplianceRequirement.l I  8      ףAsdiscussedinparagraph36ofSSAENo.3,asupplementalreportshouldnot P  changethepractitionersjudgementsaboutmaterialityinplanningandperformingtheengagementorinforminganopiniononmanagementsassertions.TheonlyinstancesofnoncompliancethatmaybeomittedfromtheSchedulearethosethatweredetectedandcorrectedbythelendersorservicersinternalcontrolovercomplianceandassociatedliabilitieswererepaidbythelenderorservicerinatimelymanner.q I  9       @  Accordingly,theSchedule(s)mustinclude,for0  lenders(examinationlevelengagements),allinstancesofnoncompliance,bycompliancerequirement,  thatarematerialindividuallyorintheaggregateandthatareidentifiedbythelenderinitsassertionsorbythepractitionerduringhisorherengagement. T$T$ 0  servicers(allengagements),allinstancesofnoncompliance,bycompliancerequirement,whether p materialornot,thatareidentifiedbytheservicerinitsassertionsorbythepractitionerduringhisorherengagement.However,inadditiontoinstancesofnoncompliancethatweredetectedandcorrected,andassociatedliabilitiesrepaidinatimelymannerasdescribedinfootnote9herein,u  I  10      ׀thefollowing @ instancesofimmaterialnoncompliancemayalsobeomittedfromtheservicersSchedule: T$T$ 0  (a)0T$T$Immaterialnoncompliance,determinedtobeisolatedandnonrecurringwhosequestioned ` amounts(knownorlikely)donotexceed$10,000orinwhichtheoutstandingloanprincipalbalanceofthespecificloansaffecteddoesnotexceed$25,000or5%ofthetotaloutstandingloanprincipalbalanceoftheindividuallenderstotalloanportfolioserviced,whicheverisless. T$T$    0  lenders(agreeduponproceduresengagement),allinstancesofnoncompliance,bycompliance  requirement,whethermaterialornot,thatareidentified: T$T$ 0  (a)0T$T$Bythelenderinitsassertionsorbythepractitionerduringhisorherengagement,andT$T$ 0  (b)0T$T$Intheservicerpractitionersreport(s)orinanyoftheservicerpractitioners Scheduleof `  FindingsandQuestionedAmountsbyComplianceRequirementthataddressesaFFELProgramcompliancerequirementfunctionforwhichthelenderhascontractedtheservicertoperform. T$T$ 0   T$T$ NoncompliancemustbeincludedintheScheduleevenifcorrectiveactionwastakenbythelender[servicer]aftertheexaminationperiod.Foreachinstanceofnoncompliance,thefollowinginformationmustbepresentedintheSchedule,if @  applicable: 0  0  a.0T$T$AlllenderIDsthatcomprisethepopulationfromwhichthesamplewasselected.T$T$   b.  Samplingmethodology.    c.  Thenumberofunitsanddollarvalueofthepopulation.  0  d.  Thenumberofunitsanddollarvalueoftheselectedsample.`T$T$ 0  e.  Thenumberofunitsanddollarvalueoftheinstancesofnoncompliance.@T$T$ XandQuestXXX=XљFortheagreeduponproceduresengagement,inadditiontoanyoftheitemsidentifiedinatoeabovethatmaybeapplicable,theSchedulemustalsoincludethepopulationofapplicabletransactionsadministeredbytheservicerforeachlenderinthepopulation.̀  @  FollowuponAuditResolutionMatters:Paragraph4.10ofGovernmentAuditingStandardsrequires 0 practitionersto:  (1)0  Followuponknownmaterialfindingsandrecommendationsfrompreviousauditsto "  determinewhethertimelyandappropriatecorrectiveactionhasbeentaken;and#!T$T$   (2)0  Reportthestatusofuncorrectedmaterialfindingsandrecommendationsfromprioraudits.% #T$T$ ThisGuiderequirespractitionerstoreportonthestatusofmaterialfindingsandanyrelatedrecommendationstomanagementinthepriortwoyearsrelatedexaminationsorauditsperformedbythepractitionerorbyotherpractitionersthatarerelatedtothelendersorservicersparticipationintheFFELProgram.Practitionersdonothavetoreportonthespecificstatusoffindingsorrecommendationsfromguarantyagencyreviews,EDprogramreviewsorotherengagementswhichwerenotexaminationsoraudits(opinionlevelengagements).AnillustrativereportisshowninAppendixB,Example6ofthisGuide. -T(+ ЇXandQuest=XљXXX$    SUBMISSIONREQUIREMENTS$-Que      @-XandQuestXXX=XљThepractitionersreportsshouldbesubmittedtothelender'sorservicersgoverningbody(forexample,  theBoardofDirectors)and/orpresident,asappropriate.XandQuest=XљXXXԀManagementshouldprepareafullreporting p packagewhichincludes(a)aninformationsheetthatincludestheperiodaddressedbytheenclosed b  practitionersreports(seeAppendixB,Example1)andidentifiesXandQuestXXX=XљԀservicerperformedFFELProgram R  compliancerequirementfunctions,XandQuest=XљXXXԀand(b)managementscorrectiveactionplan(seeAppendixB,Example D  7).ThepackageshouldbesubmittedtoEDinaccordancewiththeinstructionscontainedintheDearColleagueLetterthattransmittedthisGuide,oranyDearColleagueLetterthatsubsequentlyamendsthoseinstructionsandshouldbesentto:0  0T$T$0` T$T$0 ` T$` T$GuarantorandLenderOversightStaff  T$ T$ 0  0T$T$0` T$T$0 ` T$` T$U.S.DepartmentofEducation  T$ T$ 0  0T$T$0` T$T$0 ` T$` T$600IndependenceAvenue,SW  T$ T$ 0  0T$T$0` T$T$0 ` T$` T$Room4616,ROB3  T$ T$ 0  0T$T$0` T$T$0 ` T$` T$Washington,D.C.202025132XandQuestXXX=Xљ T$ T$ FurtherguidanceonreportingrequirementsiscontainedinSectionIVofthisGuide.TheSecretaryhastheauthorityunder432(g)oftheHEAand34CFRPart682,SubpartGtoimposeacivilpenaltyagainstalenderorservicerand/orlimit,suspend,orterminatealender'sorservicersparticipationintheFFELProgramforfailuretocomplywithFederalrequirements.$    EFFECTIVEDATES,ENGAGEMENTPERIODSANDREPORTINGDEADLINES$~6Que    V  6  EffectiveDates  &   @7XandQuest=XљXXXThisGuideiseffectiveimmediatelyforserviceraudits.Forlenderaudits,thisGuideiseffectiveforfiscal "  yearsendingonorafterDecember31,1996.EarlierapplicationofthisGuideispermittedbutnotrequired.XandQuestXXX=Xљ   EngagementPeriodsandReportingDeadlines 9Thefollowingaretheengagementperiodsandrelatedduedatesforthelenderandservicercompliancereports.Managementsfailuretomeettheseduedatesmayresultinadministrativesanctionsasdescribedin34CFRPart682SubpartG. -V(+ *qz{ ddd Xdd Xdd XT$T$q, Td", dd"+  (  \( Lenderreportscovering  \ eachfullfiscalyearending: ,|N" , Mustbesubmitted: H>* \" \0  | \HJuly23,1993March31,19951 ,|z" ,BySeptember30,19952 K|>*z" \0  | lKApril1,1995andthereafter 9||* V"| 9Withinsixmonthsfollowing lenders fiscalyearend2:0. F" l0   || :*`}~ dd Td" dd"z{T$T$`, Td", dd"+  (  X  ^(Servicerreportscovering f   eachfullfiscalyearending: ,|X  " ,Mustbesubmitted: H>*f  " ^0  | ^HJune30,1995October31,19961,3 ,|&  ,ByMay31,1997 K|>*& " ^0  | nKNovember1,1996andthereafter 9||*d "| 9Withinsixmonthsfollowing servicers fiscalyearend:0.T " n0   || :  0  1" X*""Entitieswithtwofullfiscalyearsendinginthisperiodmaysubmitseparatereportscoveringeachfiscalyearor f asinglereportcoveringthetwoyearperiod.*XX"*XXX*X2T$T$ }$&XX*}$&&}$*XX&`*}$XX *X0  0T$T$2" X*""ThesubmissiondateisextendedtoJune30,1998foranyperiodinwhichthelenderoriginatedorheldFFEL N Programloanstotaling$5millionorless.*XX"*XXX*XhT$T$ }$&XX*}$&&}$*XX&`*}$XX *X0  0T$T$3"XX*""Forfiscalyearsendinginthisperiod,servicerswhohadindependentpractitionersperformauditsoftheirfiscal 4 years1995or1996insupportofthelenderauditrequirementmaysubmitthoseauditstoEDasmeetingtheirϢservicerauditrequirementforthosefiscalyearsprovidedthoseaudits:(1)wereperformedinaccordancewith  GovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;standardsestablished  bytheAmericanInstituteofCertifiedPublicAccountants;andtheMarch1995LenderAuditGuide,Compliance ^ Audits(AttestationEngagements)oftheFederalFamilyEducationLoanProgramatParticipatingLendersissued *z bytheU.S.DepartmentofEducation,OfficeofInspectorGeneraland(2)addressedallcompliancerequirementsandapplicableassertionscontainedinSectionIIoftheMarch1995LenderAuditGuide.*XX"*XXX*XT$T$ $    FUTUREREVISIONS$Ihich   IXd,whichev=XљXXXItisthepractitionersresponsibilitytoensurehe/sheisusingthemostcurrentversionofthisGuide.ED J!$ periodicallyrevisestheFFELProgramcompliancerequirementsandtheEDOfficeofInspectorGeneralplanstoissuerevisionstothisGuidetoreflectchanges.UntiltheGuideisrevised,inconsistenciesmayexistbetweentheGuideandtheFFELProgramlawsorregulations.PractitionersshouldfollowtheFFELProgramlawsorregulationsineffectfortheperiodbeingexaminedandmodifytheirprocedurestotesttheϢFFELProgramcompliancerequirementsaccordingly.ThepractitionerisalsoresponsibleformonitoringrelevantchangesinGovernmentAuditingStandards, '*#+ AICPAStatementsonStandardsforAttestationEngagements,andgenerallyacceptedauditingstandardsandconsideringtheirimplicationsontheengagement.  ,'0 TechnicalquestionsaboutapplyingtheGuideandsuggestionsforimprovingfutureGuidesshouldbesent to:@00U.S.DepartmentofEducation@OfficeofInspectorGeneral@NonFederalAuditTeam@T T 600IndependenceAvenue,SW,MailStop1510@Washington,D.C.202021510  Fax:(202)2058238Xd,whichevXXX=Xљ 0     r XXd,whichevH   p  @ff%  SECTIONII   P  @ !STANDARDENGAGEMENT  0  P@*|(Xr hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[XXX rd,whichev  INTRODUCTION   `  .RThissection: <0   setsforththeminimumstandardsthatarethesubjectofmanagement'swrittencomplianceassertions; T$T$  <0   describesrelatedregulatoryrequirements;and T$T$  <0   providesguidanceonthegeneralapproachthepractitionershouldconsiderindesigningandcarrying   outproceduresinhisorherexaminationofmanagement'swrittenassertions. T$T$ X  |kXXXXThefirstnineassertionsrelatetoEDForm799s.Thelastthreeassertionssupplementtheassertionsabout ` theaccuracyoftheEDForm799sbyfocusingonspecificaspectsofduediligence.X  |gXXXkX(Note:Toensure P consistentreporting,theperiodofloanactivitytestedundercompliancerequirements10,11,and12concerningcollections,claimsandcuresshouldbealignedwiththetestingofthe799ssubmittedduringthelendersfiscalyear.)X  |XXXgX  p X  |kXXXXAsdiscussedinSectionI,theexaminationproceduressuggestedinthisGuidearenotintendedtobeacompletesetofprocedurestosatisfytheengagementobjectives,maynotcoverallcircumstancesorconditionsencountered,donotsupplantthepractitionersjudgementoftheworkrequired,anddonotincludesuggestedproceduresforexaminationofaservicermanagementsassertionabouttheservicersinternalcontrolovercompliancewiththespecifiedrequirements.X  |=XљXXkXParagraph39ofSSAENo.3saysthatapractitionershould obtainanunderstandingoftherequirementsspecifiedinmanagementsassertionaboutcompliance,includingrelevantlaws,regulations,andcontracts.  I  1          Accordingly,amongothersources,X  |kXXX=Xљthepractitionershouldobtainfrommanagement,readand/orhave   available:|(X4 hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[Xr X b"   (a)0  34CFRSection682 I  2      ףX  |XXXkXT$T$ 0  (b)0T$T$TheLenderSearchReport(s)(SeeAppendixD)T$T$ 0  (c)0T$T$TheEDForm799s/servicerbillingssubmitted/preparedduringthefiscalyearpT$T$   0  (d)0T$T$ThesummaryanddetailedloanrecordsandsupportingloandocumentsP T$T$ 0  (e)0T$T$StudentStatusConfirmationReports/Notificationofchangeinformation0 T$T$ 0  (f)0T$T$Servicer'scontract(s)withlendinginstitutions` T$T$ 0  (g)0T$T$DearColleagueLetter94L171/94G263SubjectRebatesofexcessinterest(windfallprofits)@ T$T$ 0  (h)0T$T$DearColleagueLetter96-L-186/96-G-287SubjectClarificationandinterpretativeguidanceon   certainprovisionsintheFFELProgramregulationspublishedonDecember18,1992.(Note:Tohelpensureconsistentimplementationoftheregulations,EDissuedaseriesoffollowupletterstoclarifytheanswerscontainedintheDCL.ThreeofthelettersweredatedMarch14,1996;April24,1996;andMay31,1996.)آ I  3      ףT$T$ X  |XXXXX  |kXXXX  COMPLIANCEREQUIREMENTS,MANAGEMENTASSERTIONS,ANDSUGGESTED ` ProceduresforExaminingComplianceFORLENDERSANDSERVICERS  P  d  1.  EDFORM799  p  dComplianceRequirements SupportforEDForms799  P Forlenderstoreceivepaymentsofinterestbenefitsandspecialallowance,quarterlyreportsmustbesubmittedtoEDonEDForm799.Loanoriginationfeescollectedonnewloansarealsoreportedonthisform.TheloanoriginationfeedueEDiseitherremittedtoEDorisoffsetbydeductingitfromtheinterestandspecialallowancebenefitsdueforthequarter.Inaddition,otherinformationontheportfolioundertheFFELProgramisrequiredtobereportedtoassistEDinpropermanagementoftheFFELProgram. $" ЇTheEDForm799isasixpartform.0   T$T$ 0  PartIidentifiesthelenderbynameandIDandifthelenderusesaservicertopreparetheform,theϢservicer'snameandaddress.Italsorequiresthatanofficialrepresentativeofthelender[orservicer,ifapplicable]certifythatthecomputationsinthereportarecorrectandproper. T$T$ 8   (#(# 0  PartsII,III,andIVcontaininformationnecessaryforEDtocollectlenderandoriginationfeesandpayinterestandspecialallowancetothelender.TheresultingnetamountiseitherapaymenttothelenderorapaymenttoED. T$T$ 0  PartsVandVIcontaininformationregardingthechangestotheguaranteedloanbalancesduringthequarterandtheanalysisofthestatusofendingbalancesofallapplicableaccounts,includingpastdueaccounts. T$T$ TheinformationreportedonEDForm799issubjecttolevelsofeditchecksfordatareasonabilityduringED'sprocessingofthepaymentrequest.Insomecasestheformwillberejectedandreturnedtothelender[servicer]forcorrection.Inothercases,EDnotifiesthelender[servicer]thatitssubmissionfailedtopasstheseeditsandinstructsittodetermineiftheerrorsresultedinanincorrectpaymentofinterestbenefitsorspecialallowance.Thelender[servicer]isfurtherinstructedbyEDtomakeapplicableadjustmentstotheaffectedloanbalancesonthenextquarterlyreport.Thelender[servicer]isrequiredtokeeprecordsnecessarytosupporttheamountsreportedonEDForm799.[34CFR682.305(a)and682.414(a)(3)(K)]. ManagementAssertion  @   LenderAssertion   p   Theloaninformation(loantypes,interestrate,beginningandendingprincipalloanbalances,andloan ` status(pastdue,ingrace,indeferment)reportedinPartsII,III,IV,V,andVIoftheEDForm799ssubmittedby[ABCLenderID#]duringtheyearended[m/d/y]agreeswith[ABCLendersID#(identifythesummaryrecords,suchasthegeneralorsubsidiaryledgers)]. 0 X  |XXXkX@! ServicerAssertion  ! X  |=XљXXXTheloaninformation(loantypes,interestrate,beginningandendingprincipalloanbalances,andloan "  status(pastdue,ingrace,indeferment)reportedinPartsII,III,IV,V,andVIofeithertheEDForm799spreparedby[XYZServicer]andsubmittedtoEDonbehalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclientsduringtheyearended[m/d/y]agreeswith[XYZServicers(identifysummaryrecords/ledgers)]andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementsthatsuchinformationbeinagreement.X  |kXXX=XљԀ R(#&  SuggestedProceduresforExaminingCompliance  B)$' a.0  ForLendersComparetheEDForm799stotheLenderSearchReporttoensurethattheyarethe "+r&) sameastheformssubmittedtoED. T$T$  -R(+ 0  ForServicersOnasamplebasis,comparetheEDForm799sX  |gXXXkXpreparedbytheservicerandsubmitted  toEDonbehalfoftheirlenderclientsX  |kXXXgXԀtotheLenderSearchReporttoensurethattheyarethesame  astheformssubmittedtoED. T$T$ b.0  ForLendersTraceloaninformationreportedontheEDForm799stothesummaryrecords/ledgers.pT$T$ X  |XXXkX0  ForServicersForthesampleoftheEDForm799spreparedbytheservicerandsubmittedtoEDonbehalfoftheirlenderclients,tracetheloaninformationreportedtotheservicer'ssummarysystemrecords/ledgers. T$T$ c.0  ServicerBillingsForasampleoflenderclientbillings,summarizeandagreetheinformation `  reportedonthebillinginformationpreparedbytheservicerandsubmittedtotheirlenderclientsfortheirpreparationofthe799s,totheservicer'ssummarysystemrecords/ledgers. T$T$ X  |kXXXX     2.  INDIVIDUALRECORDREVIEW    z ComplianceRequirementsLoanDocumentation   Alender(oraservicerthatisundercontractwithalendertoperformanyactivityforwhichtherecordsin34CFR682.414(a)(3)(ii)arerelevant)isrequiredtomaintaincurrent,completeandaccuraterecordsofeachloanthatitholds,orinthecaseofaservicer,isundercontracttoadministeronbehalfofthelender.Theseloanrecords(files)formthebasisfortheinformationcontainedintheEDForm799.Therecordsmustbemaintainedinasystemthatallowsreadyidentificationofeachloan'sstatus.Asstatedintheregulations,exceptfortheloanapplicationandthepromissorynote,theserecordsmaybestoredonmicrofilm,opticaldisk,orothermachinereadableformat.Therequireddocumentsareidentifiedin34CFR682.414(a)(3)(ii)andarelistedbelow.  a.0  Acopyoftheloanapplication8T$T$   b.0  Acopyofthesignedpromissorynote,includingtherepaymentinstrument!T$T$   c.0  Therepaymentschedule#!T$T$   d.0  Arecordofeachdisbursementofloanproceeds% #T$T$   e.0  Apaymenthistoryshowingthedateandamountofeachpaymentreceivedfromoronbehalfof h'"% theborrowerandtheamountofeachpaymentthatwasattributedtoprincipal,interest,latecharges,andothercosts. T$T$ Thefollowingdocumentsarerequiredwhentheapplicableconditionexists:  f.0  Noticesofchangesinaborrower'saddressandstatusasatleastahalftimestudent( Note: The -X(+ practitionershouldlookforthesenoticesonlyifheorshebecomesawarethattheborrowermovedorchangedstatus.) T$T$   g.0  Evidenceoftheborrower'seligibilityforadefermentT$T$   h.0  Thedocumentsrequiredfortheexerciseofforbearance` T$T$   i.0  Documentationoftheassignmentoftheloan@ T$T$   j.0  Acollectionhistoryshowingthedateandsubjectofeachcommunicationbetweenthelender  p  [servicer]andtheborrowerorendorserrelatingtocollectionofadelinquentloan;eachcommunicationotherthanregularreportsbythelender[servicer]showingthatanaccountiscurrent,betweenthelender[servicer]andacreditbureauregardingtheloan;eachefforttolocateaborrowerwhoseaddressisunknownatanytime;andeachrequestbythelender[servicer]forϢpreclaimsassistanceontheloan T$T$ 0  k.0T$T$AnyotherrecordstodocumentthevalidityofaclaimortheaccuracyofreportsT$T$ Ѐ Note:OriginalLoanApplicationsandPromissoryNotes. Whenloandocumentationrequiredtobe  originals(loanapplicationsandpromissorynotes)istransferredtoapurchaserinaloansaleortransferredtoandheldbyaguarantyagencyortrusteeonbehalfofthelender,thisGuidepermitsthepractitionertoperformalternativeprocedurestoobtainingaccesstoandreviewingtheoriginaldocuments.Thealternativeprocedurescouldincludebutarenotnecessarilylimitedto:(1)reviewingacopyorimageoftheoriginaldocumentmaintainedbythelender,servicer,orguarantyagency;(2)obtainingacopyoftheoriginalloandocumentfromthepurchaser,guarantyagencyortrusteeandcomparingittothelendersdocument;(3)obtainingalettercertifyingthatthedocumentprovidedtothepractitionerisatruecopyoftheoriginaldocument;and/or(4)reviewingloansaledocumentation(seeComplianceRequirement#7). Practitionersshoulduseprofessionaljudgementindeterminingtheadequacyandtypeofproceduresto 4 beperformed,includingproceduresforgainingaccesstotheoriginaldocumentsifsodetermined.(Forexample,apractitionermaydeterminethatitisnecessarytogainaccesstotheoriginaldocumentsbecauseofindicationsofnoncompliance,ineffectiveinternalcontrols,orlackofcontrols.Undersuchcircumstances,thisGuiderequiresthelendertoworkwiththepurchaser,guarantyagencyortrusteetomakearrangementsfortheirpractitionertoobtainaccesstotheoriginalloandocumentation.X  |gXXXkXIfalternativeprocedurescannotbeperformed,thepractitionershouldX  |=XљXXgXmodifythestandardreportifthere t&!$ isarestrictiononthescopeoftheengagement.X  |gXXX=XљPractitionersmustdocumentintheworkingpapersthe f'"% proceduresperformed.(See WorkingPapersinSectionIofthisGuide.)X  |kXXXgX X(#&   ManagementAssertion  8*%(    X  |=XљXXkXLenderAssertion  (+x&)   [ABCLenderID#]supportedloansreportedintheEDForm799ssubmittedduringtheyearended[m/d/y]withloanrecordsthatincludedallapplicabledocumentslistedinSectionII,ComplianceRequirement2, -X(+ oftheAuditGuide.  @! ServicerAssertion   [XYZServicer]supportedloansreportedineithertheEDForm799spreparedby[XYZServicer]and  submittedtoEDonbehalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclientsduringtheyearended[m/d/y]with"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancerequirementsforsupportingloanswith"loanrecordsthatincludeallapplicabledocumentslistedinSectionII,ComplianceRequirement2,oftheAuditGuidethatourlenderclientshavecontractedwith[XYZServicer]tostore.X  |kXXX=Xљ 0  X  |XXXkX(Ifalenderhasnotcontractedwiththeservicertomaintaintheoriginalloanapplicationandpromissorynotes,thelenderwouldberesponsibleformakingtheassertionaboutmaintenanceofdocumentsforwhichithasnotcontractedtheservicertostore.)X  |kXXXX   SuggestedProceduresforExaminingCompliance    a.0  Traceloaninformationfromsummaryrecords/ledgerstodetailedloanrecords.T$T$ b.0  Testasampleofindividualloanfilestodetermineiftherequireddocumentsaremaintainedbythe  lender[servicer]andtheinformationrecordedinthedetailedloanrecordagreeswiththeinformationinthesedocuments. T$T$ c.0  ForServicersForthesampleselectedabovereadtheservicerscontractstoidentifyanyexceptions P formaintainingtherequireddocuments(forexample,originalloanapplicationsandpromissorynotes). T$T$   Note: 0 4 IfthepractitionerintendstousethesamesampletotestPartsII,IIIandIVoftheED ` Form799s,changesinloanstatusshouldbenotedduringthetesting. 4T$4T$   3.0  LOANORIGINATIONFEES  $T$T$  8 ComplianceRequirementsPaymentofLoanOriginationFees  "  AlendermaychargesubsidizedStaffordloanborrowersaloanoriginationfeenottoexceedthemaximumratespecifiedbystatute.ForSLSandPLUSloansoriginatedafterOctober1,1992,thelender must chargetheborroweraloanoriginationfee.FromOctober1,1992throughJune30,1994 t&!$ borrowersofUnsubsidizedStaffordloanswererequiredtopayacombinedoriginationfeeandinsurancepremium.ForallUnsubsidizedStaffordloansfirstdisbursedonorafterJuly1,1994forperiodsofenrollmentthateitherincludethatdateorbeginafterthatdate,theoriginationfeepaidtotheSecretarybyalenderisreducedto3percentoftheprincipalamountoftheloan.Themaximumguaranteefee(insurancepremium)thataguarantyagencycanchargealenderandthelendercanpassalongtotheborrowerwasreducedfrom3percentto1percentforloansfirstdisbursedonorafterJuly1,1994forperiodsofenrollmentthatincludethatdateorbeginafterthatdate.Thelenderisrequiredtodeductthe -X(+ originationfee,andotherapprovedfees,fromtheloanproceedsofaSubsidizedStaffordloan,withthefeesdeductedonaproratabasisforloansdisbursedinmultipleinstallments.  TheamountoforiginationfeesisreportedinPartIIofEDForm799.Adjustmentsforpriorperiodsarecombinedandreportedasaseparatelineitem.(Anyadjustmentswithinthequarterwillbeshowninthenetamountofloansdisbursedwithinthesamequarterbeingreported.)Typically,priorperiodadjustmentsareloancancellations.Indeterminingthetotalamountofalender'squarterlypayment,EDdeductstheamountoforiginationfeesfromtheamountofinterestandspecialallowancebenefits.However,somelenderswithloanoriginationvolumethatisdisproportionatetotheirloanholdingsmayhaveoriginationfeesthatexceedtheamountofinterestbenefits.ThisresultsinanamountowedtoEDforthequarter.See34CFR682.305(a)(3)formoreinformation. ManagementAssertion  B  @" X0  =XљXXkXLenderAssertion  "  Duringtheyearended[m/d/y,ABCLender](a)completelyreported,classifiedandcomputed,in  accordancewithEDForm799instructions,theloanoriginationinformationreportedinPartIIoftheEDForm799ssubmittedduringthatperiodand(b)paidtoEDloanoriginationfeesinexcessofinterestandspecialallowance.  @! ServicerAssertion  r Duringtheyearended[m/d/y,XYZServicer]completelyreported,classifiedandcomputed,inaccordance b withEDForm799instructions"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithEDForm799instructionsforclassifyingandcomputing"theloanoriginationinformationreportedinPartIIineithertheEDForm799spreparedby[XYZServicer]andsubmittedtoEDonbehalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclients.Duringtheyearended[m/d/y,XYZServicer]paidED"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementsforpaymenttoEDof"originationfeesinexcessofinterestandspecialallowance.(IfalenderhasnotcontractedwiththeservicertopayanyloanoriginationfeesinexcessofinterestandspecialallowancetoEDontheirbehalf,thelenderwouldberesponsibleformakingtheassertionregarding ! paymentstoED.) "  X0  kXXX=Xљ   SuggestedProceduresforExaminingCompliance  $" X0  XXXkXa.0  Fromtheloandisbursementrecords,selectasampleofloansandtracetheloanandoriginationfee r&!$ tothequarterlyEDForm799orbillinginformation,asapplicable.Thesampleshouldincludeloansoriginatedineachquarter. T$T$ b.0  TestwhetherloanoriginationfeesarecomputedinaccordancewiththeEDForm799instructions 2*%( byrecalculatingthoseamountsorbyapplicationofreasonablenesstests. T$T$ c.0  Testreportedpriorperiodadjustmentsforproperrecording.-R(+T$T$ ЇX0  kXXXXd.0  Ifloanoriginationfeesexceededthelender'sinterestandspecialallowancepayment,review  documentationtoverifythatthelenderpaidtheoriginationfeestoED.X0  XXXkXIftheservicerisresponsible  forpayingtheoriginationfeestoEDonbehalfoftheirlenderclients(percontract),reviewdocumentation(forexample,recordofpayments)toverifythattheoriginationfeeswerepaidtoED. T$T$ X0  kXXXX  4.0  INTERESTBENEFITS P T$T$   ComplianceRequirementsEligibility,ProperRateandProperCalculations  0  EDpaysthelenderinterestbenefitsoneligibleFFELProgramloans(subsidizedStaffordandcertainconsolidatedloans) I  4      ׀onbehalfofaqualifiedborrowerduringcertainloanstatuses.Thesestatusesinclude P  theinschoolloanperiod,thegraceperiod,andanyauthorizeddefermentperiod(34CFR682.300).Generally,ED'sobligationtopayinterestbenefitstoalenderceaseswhentheeligibleborrowerentersrepaymentstatusanddoesnotqualifyfordeferment.Interestbenefitstothelenderalsobeginorterminatewithcertainotherdayspecificeventsenumeratedin34CFR682.300(b)(2)and(c).(SeeComplianceRequirement8forfurtherdiscussionofconversiontorepaymentstatus).TheinformationneededtocalculateinterestbenefitsisreportedinPartIIIofEDForm799.ApplicableloaninterestratesareprovidedinSection427A(a)(i)oftheHEA.InterestbenefitsduethelendermaybecalculatedbyusingeithertheAverageDailyBalanceorActualAccrualmethodsasdefinedin34CFR682.304(b)and(c).Adjustmentsforpriorperiodsmustbereportedasseparatelineitems.XsbursementgXXXkXNote:Practitionersshouldbeawarethattheymaynotbeabletorelyontheinterestratestatedonthe @ promissorynoteasitcouldbewrong(forexample,becausetheguarantyagencyscomputersystemguaranteedaloanatthewrongrate)orbecauseratesmayhavechangedduetoaconversiontothevariableinterestrate.XsbursementkXXXgX ManagementAssertion  @ @" LenderAssertion    LoansincludedinPartIIIofEDForm799ssubmittedby[ABCLenderID#]duringtheyearended ! [m/d/y]were(1)inastatuseligibleforinterestbenefits,(2)assignedthecorrectinterestrateinaccordancewithSection427A(a)(i)oftheHEA,asamended,and(3)classifiedinthecorrectinterestratecategoryontheEDForm799sinaccordancewithEDForm799instructions.Endingprincipalamounts,theaveragedailybalancesandtheinterestamountswerecalculatedinaccordancewiththeEDForm799instructions. p&!$  `'"% @! Xsbursement=XљXXkXԢServicerAssertion   LoansincludedinPartIIIofeithertheEDForm799spreparedby[XYZServicer]andsubmittedtoEDon  behalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclientsduringtheyearended[m/d/y]were"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementsthatloansare"(1)inastatuseligibleforinterestbenefits,(2)assignedthecorrectinterestrateinaccordancewithSection427A(a)(i)oftheHEA,asamended,and(3)classifiedinthecorrectinterestratecategoryinaccordancewithEDForm799instructions.Endingprincipalamounts,averagedailybalances,andinterestamountswerecalculatedinaccordancewith"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolsovercompliancewithrequirementsforcalculationinaccordancewith"theEDForm799instructions.  p  XsbursementkXXX=Xљ SuggestedProceduresforExaminingCompliance  P  a.0  TestthattheloansareassignedthecorrectinterestrateinaccordancewithSection427A(a)(i)ofthe 0  ТHEAandarereportedinthecorrectinterestratecategory. T$T$ b.0  Testthatthelender[servicer]beginsandendsbillingEDforinterestbenefitsontheappropriateday  forloansdocumentedasinschool,ingrace,orinauthorizeddeferment. (Note:Thepractitioner  maywanttoperformthisstepinconjunctionwiththeprocedurestotestComplianceRequirement8.) T$T$ XsbursementXXXkXc.0  Reviewloanrecords,disbursementrecords,orotherdocumentationtoverifythatinterestisnotbilled h forperiodsafterthedatesspecifiedin34CFR682.300(b)(2)orforinterestnotcoveredunder34ϢCFR682.300(c). I  5      ׀HT$T$ d.0  Forconsolidatedloansthatarebilledforinterestbenefits,reviewthehistoryfilesandverifythatthe (x loanconsolidatedonlysubsidizedStaffordloansasrequiredorthattheconsolidationloanapplicationwasreceivedbythelenderonorafterJanuary1,1993butnotlaterthanAugust9,1993.[34CFR682.300(a)] T$T$ e.0  Testtheaccuracyoftheaveragedailybalanceoractualaccrualcalculationsasdefinedin34CFR  ( 682.304(b)and(c)byrecalculatingamountsorbyreasonablenesstests. T$T$ f.0  Testreportedpriorperiodadjustmentsforproperrecordingofinterestrateandcategoryandwhether #! thecorrectprincipalandbillingdayswereused. T$T$ XountoforkXXXX  5.  SPECIALALLOWANCEPAYMENTS  h'"%   ComplianceRequirementsEligibilityandProperCalculationofAverageDailyBalance   Inadditiontointerestbenefits,EDpaysacompensatingspecialallowancetothelenderontheaverageunpaiddailyloanprincipalbalance.Theaverageloanprincipal,includinganyappropriatecapitalizedinterest,istobecalculatedusingtheAverageDailyBalancemethodasdefinedin34CFR682.304(d).Thelender[servicer]doesnotcomputethespecialallowancepayment.Thelender[servicer]reportsinPartIVofEDForm799theaveragedailybalanceofthoseloansqualifyingforthepayment,ineachcategory.EDcomputesthepaymentduethelenderduringprocessingoftheEDForm799.(34CFR682.304305)Adjustmentsforpriorperiodsduetodifferencesbetweenwhatshouldhavebeenreportedinpriorquarters,andwhatwasoriginallyreportedinpriorquarters,arereportedasseparatelineitems.[Note:TheHigherEducationTechnicalAmendmentsof1993(PublicLaw103208)(enactedDecember20,1993)requiredlenderstoconvertfixedrateloansforwhichexcessinterestwasrequiredtoberebatedtoborrowersorEDtoannualvariablerateloans.Certainlenders(thosethatdidnotpreviouslyapplyrebatesorthatreversedpreviouslyappliedrebates)wererequiredtocalculatequarterlyvariableinterestratesforeachofthequarterspriortotheannualvariablerateconversionandrebatetheexcessinterestpaidforthosequarterstotheborrowerorED.AnissuehasrecentlybeenidentifiedwherebysomelendersmaybebillingEDforspecialallowancepaymentsbasedontherecalculatedquarterlyvariableinterestrates,forperiodspriortotheconversionofloanstotheannualvariablerate.PerQ&A20inDearColleagueLetter94L171/94G263,thisisnotpermitted. ` Aloanlosesreinsurancecoverageandinterestandspecialallowancepaymentbenefitsduetoviolationsofduediligencerequirements.Toreinstatetheloan,ithastobe"cured."Aloancanbecuredbyobtaininganewsignedrepaymentagreementand/orreceiptofonefullpaymentfromtheborrower.SeeAppendixDof34CFR682formoreinformationoncures.Thelender[servicer]isrequiredtoterminatethespecialallowancerequestsonloanbalanceswhenadayspecificeventoccursandtheloanisnolongereligibleforthepayment.Thesedayspecificeventsaredescribedin34CFR682.302(d).   ManagementAssertion  "     LenderAssertion  $"   LoansincludedinPartIVofEDForm799ssubmittedby[ABCLenderID#]duringtheyearended[m/d/y]were(1)inastatuseligibleforspecialallowanceand(2)properlycategorizedontheEDForm799inaccordancewiththeinstructions.Endingprincipalbalances,averagedailybalancesandadjustmentsfordifferencesinaveragedailybalanceswerecalculatedinaccordancewiththeinstructions. R(#&  @!Xountofor=XљXXkX@@..ServicerAssertion 2*%(  LoansincludedinPartIVofeithertheEDForm799spreparedby[XYZServicer]andsubmittedtoEDon "+r&) behalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclientsduringtheyearended[m/d/y]were"andasof[m/d/y,XYZServicer]hadeffectiveinternal -R(+ controlovercompliancewithrequirementsthatloansare"(1)inastatuseligibleforspecialallowanceand(2)properlycategorizedontheEDForm799inaccordancewiththeEDForm799instructions.Endingprincipalbalances,averagedailybalances,andadjustmentsfordifferencesinaveragedailybalanceswerecalculatedinaccordancewith"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolsovercompliancewithrequirementsforcalculationinaccordancewith"theEDForm799instructions. p XountoforkXXX=Xљ SuggestedProceduresforExaminingCompliance `   a.0  Testthatthelender[servicer]reportsloansbythepropertimeperiodandspecialallowancecategory @  asdefinedintheEDForm799instructions. T$T$ b.0  Testthatthelender[servicer]isterminatingspecialallowancerequestsonloanbalanceswhenaday `  specificeventspecifiedin34CFR682.302(d)occurs,asdocumentedintheborrower'sfile. T$T$ c.0  Testtheaccuracyoftheaveragedailybalancecalculationsasdefinedin34CFR682.304(b)by 0  recalculatingamountsorbyreasonablenesstests. T$T$ d.0  Testreportedpriorperiodadjustmentsforproperrecordingofinterestrateandcategory,andwhether  thecorrectprincipalandbillingdayswereused.Assurethatthelender[servicer]hasnotclaimedtheadditionalspecialallowancepaymentsforquarterspriortotheconversionoffixedrateloanssubjecttorebateofexcessinteresttoannualvariablerates. T$T$ e.0  Testasampleofloansincludedintheaveragedailybalancestodeterminethattheaveragedaily ` balancesdonotincludethefollowingcategoriesofloans:(Note:Loanswithduediligence/timelyfilingviolations,loanspaidinfullandloanswithoutreinsurancemaybeeligibleforspecialallowancefortheperiodduringaquarterpriortotheterminatingevent.) T$T$ |(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[X4 X0  0T$T$ 4 Nonsubsidized I  6      ׀Staffordloans(unlessmadebeforeOctober1,1981)`T$T$ 0  0T$T$ 4 Unconsummatedloans(cancellations) I  7      ףPT$T$ 0  0T$T$ 4 Loanswithfuturedisbursements@T$T$ 0  0T$T$04T$T$Loanswithduediligence/timelyfilingviolations(sufficienttocauselossofguaranty)04T$4T$ 0  0T$T$ 4 Loanspaidinfull T$T$ 0  0T$T$ 4 Loanswithoutreinsurance!T$T$     Xory.gXXXkX 4 Loansbeyondthedateofsale "  Xory.kXXXgX  6.  LOANPORTFOLIOANALYSIS  % #   p&!$ М ComplianceRequirementsAccurateLoanPrincipalBalances   Thelender'soutstandingloanprincipalbalancesforeachtypeofloanattheendofthequarterarepresentedinPartsVandVIoftheEDForm799.Thissummaryoftheendingbalancesisrequiredeachtimealender[servicer]submitstheform.Allloansareincludedeveniftheydonotqualifyfortheinterestbenefitorspecialallowancepayment,exceptthatloansonwhichtheguaranteewasvoidedarenotincludedinPartVI,unlesstheywerecured.PartVIalsocontainsinformationaboutthedelinquentstatusofloansinthelender'sFFELportfolio.See34CFR682.414(a)(3)(ii)formoreinformation. &  ManagementAssertion  @.. LenderAssertion XXXc=(hH  Z 6Times New Roman RegularcInPartsVandVIoftheEDForm799ssubmittedduringtheyearended[m/d/y,ABCLender]properlyclassifiedandaccuratelyreportedloanprincipalbalancesinaccordancewiththeEDForm799instructionsandincludedalloutstandingloans(exceptthoseforwhichtheguarantywasvoidedarenotincludedinPartVI).XXXUk)L  Z (CG Times RegularU'  @..ServicerAssertionXXXc=(hH  Z 6Times New Roman Regularc InPartsVandVIoftheEDForm799spreparedby[XYZServicer]andsubmittedtoEDonbehalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclientsduringtheyearended[m/d/y,XYZServicer]properlyclassifiedandaccuratelyreported"and,asof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstoproperlyclassifyandreport"loanprincipalbalancesinaccordancewiththeEDForm799instructionsandincludedalloutstandingloans(exceptthoseforwhichtheguarantywasvoidedarenotincludedinPartVI).XXXUk)L  Z (CG Times RegularU$   SuggestedProceduresforExaminingCompliance$   a.8..Reviewtheclassificationofloantypeandstatusasreportedbythelender[servicer].Testasampleofloanstodeterminewhethertheloanswereproperlyclassified.b.0..TestcompletenessbytracingasampleofloansfromindividualloanrecordstoEDForm799sorbillinginformation,asapplicable.Onlyloanswithavalidguaranteeshouldbereported.  7.0..LOANSALES,PURCHASESANDTRANSFERS   ComplianceRequirementsReportingofSales,PurchasesandTransfers Loansales,purchasesandtransfersbetweeneligiblelenders[servicers]entailspecialportfoliomanagementrisksandthereforerequirespecialcontrols.Thelenders[servicers]mustexerciseduecareinensuringthatgapsinservicingdonotoccur,possiblyaffectingthereinsuranceoftheloan.Thelenders[servicers]mustprovidenotice,eitherjointlyorseparately,ofthetransferoftheloantotheborrowerandthepurchasinglendermustnotifytheguarantyagencyoftheloantransfer.Inaddition,within90daysofitsacquisitionoftheloan,thepurchasinglendershallreporttoatleastonenationalcreditbureautheinformationrequiredin34CFR682.208(b)(1)(ii)(v).Finally,thesellermustensurethatalloftherequiredloandocumentationistransferredtothepurchaser,includingaccuratepaymenthistories.Ifanoriginatinglendersellsorotherwisetransfersaloantoanewholder,EDwillholdtheoriginatinglenderliableforthepaymentoftheoriginationfeesandwillnotpayinterestbenefitsorspecialallowancetothenewholderorpayreinsurancetotheguarantyagencyuntiltheoriginationfeesarepaidtotheSecretary.See34CFR682.305(a)(4).Thelender[servicer]isrequiredtomaintainaccuraterecordsofeachloan,includingrecordsofloansales,purchasesortransfers.See34CFR682.414(a)(3)(ii).̇ ManagementAssertion  @.. LenderAssertion XXXc=(hH  Z 6Times New Roman RegularcLoanpurchasesandsalesduringtheyearended[m/d/y]wererecordedby[ABCLenderID#]inaccordancewiththepurchase/salesagreementswithrespecttothestart/enddateofeligibilityforinterest,specialallowanceandresponsibilityforpaymentofloanoriginationfees.LoanoriginationfeesforwhichwewereresponsiblewerepaidtoEDinaccordancewiththeagreements.Forloanstransferredto[ABCLenderID#]duringtheyearended[m/d/y],allapplicableEDForm799loandata,includingbeginningbalanceswererecordedcompletelyandaccuratelyintothelendersloanservicingsystems.XXXUk)L  Z (CG Times RegularU @..ServicerAssertionXXXc=(hH  Z 6Times New Roman Regularc Loanpurchasesandsalesmadeonbehalfofourlenderclientsduringtheyearended[m/d/y],wererecordedby[XYZServicer]inaccordancewith"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercomplianceforrecordingloanpurchases/salesinaccordancewith"the[identifytheapplicabledocumentssuchaspurchase/salesagreementsortheinstructionsABCLenderprovidedtoXYZServicer]withrespecttothestart/enddateofeligibilityforinterest,specialallowanceandresponsibilityforpaymentofloanoriginationfees.Duringtheyearended[m/d/y,XYZServicer]paidED"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementsforpaymenttoEDof"loanoriginationfeesforwhichwewereresponsibleforpayingonbehalfofourlenderclientsinaccordancewiththeagreements.Duringtheyearended[m/d/y,XYZServicer]recordedcompletelyandaccuratelyintheservicersloanservicingsystems"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstorecordcompletelyandaccuratelyintheservicersloanservicingsystems"allapplicableEDForm799loandataforloanstransferred,includingbeginningbalances.XXXUk)L  Z (CG Times RegularU SuggestedProceduresforExaminingCompliance XXXE* `CG TimesEa.0..Forasampleofloans,traceprincipalamountofloanssoldreportedontheEDForm799/billingstothebillsofsale.XXXUk)L  Z (CG Times RegularUb.0..Reviewasampleoftheloanpurchase/salesagreements[orifapplicable,lenderinstructionsprovidedtotheservicer]andascertainthetermsoftheagreementsastodayofsale,transferoffundsandresponsibilityforloanoriginationfees.Testthatthesale/purchasewasconductedinaccordancewiththesetermsandthedayspecificeventwasproperlynotedinthelender's[servicers]recordsastothestart/enddateofeligibilityforinterestbenefitsandspecialallowance.c.0..XXXE* `CG TimesEForloansalesthatoccurredwithinthequarterinwhichtheloanwasdisbursed,determinethatthelenderorservicer,onbehalfofitslenderclients,reportedtheoriginationfeeliabilitytoED. (NotethepractitionermaywanttoperformthisstepinconjunctionwiththeprocedurestotestComplianceRequirement3). XXXUk)L  Z (CG Times RegularUXXXE* `CG TimesEd.0..Selectasampleofloansthatweretransferredtothelender[servicer]duringtheexaminationengagementperiodandverifythatallapplicableEDForm799loandata,includingbeginningbalances,wasenteredcompletelyandaccuratelyintothelenders[servicer's]system.Verifythatallrequiredsupportingloandocumentationwasobtainedandmaintained(unlessnotcontractedtostore). (NotethepractitionermaywanttoperformthisstepinconjunctionwiththeprocedurestotestComplianceRequirement2). XXXUk)L  Z (CG Times RegularU  8...STUDENTSTATUSCHANGES   ComplianceRequirements RecordingofStudentStatusChanges GuarantyagenciesareresponsibleforensuringthatschoolscompleteandsubmittheStudentStatusConfirmationReport(SSCR).TheguarantyagencyforwardstheSSCRorothernotificationofchangeinformationtothelender[servicer].Thefrequencyandtimingofforwardingsuchinformationmayvaryamongguarantyagencies.SomeguarantyagenciesforwardtheSSCRorothernotificationofchangeinformationtothelenderonamonthlybasis.Inaddition,onaninterimbasis,schoolswillforwardnotificationofchangeinformationdirectlytothelender[servicer].Thelenders[servicers]mustusethedatapromptlytomakeproperandtimelyadjustmentstoeachloan.Thebillingforinterestbenefitsandspecialallowancepaymentsreliesonthetimelyandproperprocessingofstudentstatusinformation,includingtimelyconversiontorepaymentstatus.Theconversionofaloantorepaymentstatusissubjecttoanumberofconditionsasdefinedin34CFR682.209.Typically,subsidizedandunsubsidizedStaffordloanborrowersbeginrepaymentsixmonthsafterreachinglessthanhalftimeenrollment.PLUS,SLSandConsolidatedloansgointorepaymentonthedaytheloanisdisbursed,orifmultiplydisbursed,onthedaytheloanisfullydisbursed.Thefirstpaymentofprincipalisduewithin60daysofthedatetheloanisfullydisbursed.Forpurposesofthisrequirement,promptmeansadjustmentsaremadeintimetosatisfythetimerequirementsoutlinedin34CFR682.209forconvertingandbeginningcollectionsofloans. (Note:PractitionersshouldbeawarethatlateorimproperconversiontorepaymentstatusisaconcerntoEDandhasbeenanareaofweaknessEDhasfoundtoexistwhenperformingtheirfilereviewsatlenders.) TheHigherEducationAmendmentsof1992changedthemethodofdeterminingwhenaStaffordloanentersrepaymentfrommonthspecifictodatespecific.Thischangealsoeffectivelymadedatespecificthebeginningandendingofaborrower'sgraceperiod.However,becauseofthesystemschangesmanylendersandguarantyagenciesarerequiredtomaketocomplywiththisprovision,EDdecidednottoenforcetheuseofdatespecificgraceperiodandrepaymentstartdatesuntiltheimplementationofthestudentstatusconfirmationreportsystemrequiredby34CFR682.401(b)(20).Therefore,lenderscouldcontinuetousemonthspecificdatesfordeterminingstudentseparationdates(i.e.,thelastdayofthemonthinwhichtheborrowerceasedtobeenrolledasatleastahalftimestudentataneligibleschool)untiltheguarantyagenciesimplementedthestudentstatusconfirmationsystemreportsystemrequiredby34CFR682.401(b)(20).Lenderswhoconvertedtothedatespecificmethodcouldcontinuewiththatmethod.TheuseofdayspecificgraceperiodsandrepaymentstartdatesshouldbeimplementedinaccordancewithXXXE* `CG TimesEDearColleagueLetter96L186/96G287.SeeXXXUg)Lr  Z (CG Times RegularUԀXXXE* `CG TimesEDearColleagueLetter96L186/96G287questionandanswer18formoreinformation.XXXUk)L  Z (CG Times RegularUԀ &  ManagementAssertion  @.. LenderAssertion XXXc=(hH  Z 6Times New Roman RegularcUponreceiptofStudentStatusConfirmationReportsorothernotificationofchangeinformationduringtheyearended[m/d/y,ABCLender]accuratelyupdatedloanrecordsforchangestostudentstatus,includingconversiontopaymentstatusinaccordancewith34CFR682.401(b)(20)and34CFR682.209,respectively.XXXUk)L  Z (CG Times RegularU'  @..ServicerAssertionXXXc=(hH  Z 6Times New Roman Regularc UponreceiptofStudentStatusConfirmationReportsorothernotificationofchangeinformationforloansservicedduringtheyearended[m/d/y,XYZServicer]accuratelyupdated"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstoaccuratelyupdate"loanrecordsforchangestostudentstatus,includingconversiontopaymentstatusinaccordancewith34CFR682.401(b)(20)and34CFR682.209,respectively.XXXUk)L  Z (CG Times RegularU SuggestedProceduresforExaminingCompliance a.0..TraceasampleofloansfromtheSSCRs(orothernotificationofchangeinformation)receivedfromguarantyagenciesduringtheperiodtoloanrecordstodetermineifchangestostudentstatusasreportedbyguarantyagenciesweremadeaccuratelyandpromptly.XXXE* `CG TimesE(Note:Changeinformationmaybereceivedandmaintainedinmachinereadableformat.)XXXUk)L  Z (CG Times RegularUb.0..Determinewhetherconversionstorepaymentstatusweremadeinaccordancewith34CFR682.209.XXXE* `CG TimesEXXXUk)L  Z (CG Times RegularUԀXXXE* `CG TimesEc.0..Obtainandreviewtheerrorreports(manifests,inschooldiscrepancyreports,oroutofschoolstatusreports),ifany,generatedbythelender[servicer]whichidentifydiscrepanciesbetweentheSSCRsreceivedfromguarantyagenciesandthelenders[servicer's]records.Forasampleofloans,tracestudentstatusdatatoanyinterimstatusreportsorothernotificationofchangeinformationwhichmayhavebeenreceiveddirectlyfromtheschools.XXXUk)L  Z (CG Times RegularU  9...PAYMENTPROCESSING  ComplianceRequirements PaymentProcessing Borrowersmayprepayatanytimewithoutapenalty.Thelender[servicer]maycredittheentireprepaymentfirsttoanyaccruedlatechargesorcollectioncosts,andthentoanyoutstandinginterestandthentooutstandingprincipal.Unlesstheborrowerrequestsotherwise,iftheprepaymentequalsorexceedstheestablishedmonthlypaymentamount,thelender[servicer]shallapplytheprepaymenttofutureinstallmentsandadvancethenextpaymentduedate.Thelender[servicer]must(1)informtheborrowerinadvancethatanyadditionalfullpaymentamountssubmittedwithoutinstructionsastotheirhandlingwillbeappliedtofuturescheduledpaymentswiththeborrowersnextscheduledpaymentduedateadvanced,or(2)provideanotificationafterthepaymentsarereceivedstatingthatthepaymentshavebeensoappliedandthedateoftheborrowersnextscheduledpaymentduedate.See34CFR682.209(b)formoreinformation. ManagementAssertion  @.. LenderAssertion XXXc=(hH  Z 6Times New Roman RegularcDuringtheyearended[m/d/y,ABCLender]:(a)calculatedinterestandprincipalinaccordancewith34CFR682.304and(b)applied(i)loanpaymentseffectivewiththedayofreceiptand(ii)prepaymentsinaccordancewith34CFR682.209(b)orthedocumentedspecificrequestoftheborrower.XXXUk)L  Z (CG Times RegularUXXXE* `CG TimesE@.. ServicerAssertion XXXc=(hH  Z 6Times New Roman RegularcForloansservicedduringtheyearended[m/d/y,XYZServicer]:(a)calculated"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstocalculate"interestandprincipalinaccordancewith34CFR682.304and(b)applied"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstoapply"(i)loanpaymentseffectivewiththedayofreceiptand(ii)prepaymentsinaccordancewith34CFR682.209(b)orthedocumentedspecificrequestoftheborrower.XXXUk)L  Z (CG Times RegularU$   SuggestedProceduresforExaminingCompliance$   a.0..Testwhetherthelender[servicer]appliestheborrowerpaymentsandprepaymentstoloanrecordseffectivewiththedayofreceipt.b.0..Testthatapplicationofprincipalandinterestareappropriatelycalculatedandthatthecorrectamountisappliedtotheindividualborrowerloanbalance.c.0..Testifprepaymentswereallocatedinaccordancewiththerequirementssetforthin34CFR682.209(b)and/orifapplicable,borrowerinstructions.XXXE* `CG TimesE  10.0..DUEDILIGENCEBYLENDERSORSERVICERSINTHECOLLECTIONOFDELINQUENTLOANS  ComplianceRequirementDueDiligenceinCollectingFFELProgramLoans Lenders[servicers]arerequiredtofollowspecificcollectionactivitiesandmeetspecificclaimfilingdeadlinesondelinquentloans(34CFR682.411).Therearetwodifferentsetsofduediligenceregulationsthatalender[servicer]maybefollowingforloansincludedintheirportfolios.Lenders[servicers]wereallowedtocontinueusingtheNovember1986regulationsonloansthatwereincludedintheirportfoliosbothpriortoandafterissuanceoftheDecember1992regulations.Thepractitionershouldconsultwiththelender[orservicer]andreviewDearColleagueLetter96L186/96G287astotheapplicabilityofthe1986and1992regulationsfortheloanstested. [Note:Inaddition,DearColleagueLetter96L186/96G287stipulatesJuly1,1996asthedeadlineforfullyimplementingandenforcingcertainprovisionsoftheDecember18,1992regulationsthatweresubjecttodelayedenforcement.] Failuretocomplywiththefederalduediligenceregulationsresultsinthelossofreinsurancefortheguarantyagencyandthelender'srighttoreceiveinterestandspecialallowance.̇XXXIj `CG TimesW1I GeneralInformation Lenders[servicers]arerequiredtomaintaincompleteandaccuraterecordsofeachloanthatitholds.Indeterminingwhetherthelender[servicer]mettheduediligencecompliancerequirementspertainingtocollectionofdelinquentloansthedocumentationmaintainedshouldinclude:0..0..Copiesofcollectionletterssenttotheborrowerorendorser,ortheloancollectionhistory.Informationonfileshouldidentifythedateandsubjectofeachcommunication(forexample,documentationofatelephonecontact,writtennotice,collectionletter,etc.).betweenthelender[servicer]andtheborrowerorendorser,regardingdelinquentloancollection.[Iflettersaresystemgenerated,theorganizationisonlyrequiredtomaintainsamplesofeachletterwiththesystemhistoryidentifyingwhichletterwassentonwhatdate.]0..0..Anyotherloanportfoliodocumentsthatprovideevidencethattheduediligencerequirementsweremet.&&&5!5[Theloanrecordsmaybestoredonmicrofilm,opticaldisk,orothermachinereadableformats]XXXE* `CG TimesE   December1992Regulations   Delinquency Delinquencyonaloanbeginsonthefirstdayaftertheduedateofthefirstmissedpaymentwhichisnotmadelater.Ifapaymentismadelate,thefirstdayofdelinquencyisthedayaftertheduedateofthenextmissedpaymentwhichisnotlatermade.Apaymentthatiswithin$5.00oftheamountnormallyrequiredtoadvancetheduedatemayneverthelessadvancetheduedateifthelender'sproceduresallowforthatadvancement. 1to10DaysDelinquent: Onewritten noticeorcollectionlettershouldbesenttotheborrower.(Exceptinthecasewherealoanisbroughtintothisperiodbyapaymentontheloan,expirationofanauthorizeddefermentorforbearanceperiod,orthelender's[servicer's]receiptfromthedraweeofadishonoredchecksubmittedasapaymentontheloan.) 11to180DaysDelinquent :(11-240daysdelinquentforaloanrepayableininstallmentslessfrequentthanmonthly.)Unlessexemptedassetforthin34CFR682.411(d)(4),duringthisperiodthelender[servicer]shallengageinthefollowing:Atleastfourdiligenttelephoneefforts*[34CFR682.411(l)]onemustbepriorto90daysandonemustbeonorafter90days;atleastfourcollectionlettersatleasttwolettersofwhichmustwarntheborrowerthatiftheloanisnotpaidthelender[servicer]willassigntheloantotheguarantyagencythat,inturn,willreportthedefaulttoallnationalcreditbureaus,andthattheagencymayinstituteproceedingstooffsettheborrower'sstateandfederaltaxrefunds,togarnishtheborrower'swages,andbringsuittocompelloanrepayment.DearColleagueLetter96L186/96G287questionandanswer50XXXUk)L  Z (CG Times RegularUstatesthatalthoughthetimingoftherequiredcollectionlettersislefttothediscretionofthelender, theSecretaryintendsthatthetwomostforcefullettersshouldbesentlateinthedelinquencycycle,whentheyarelikelytohavethegreatesteffectontheborrower.Thereforealendermaychoosetosendoneormoreoftherequiredcollectionlettersduringtheseperiods,providedthetimingandforcefulnessofthelenderscollectionlettersmeettheSecretarysstatedintention.XXXE* `CG TimesĖFollowingthelender's[servicer's]receiptofapaymentontheloanoracorrectaddressfortheborrower,thelender's[servicers]receiptfromthedraweeofadishonoredcheckreceivedasapaymentontheloan,thelender's[servicers]receiptofacorrecttelephonenumberfortheborrower,ortheexpirationofanauthorizeddefermentorforbearanceperiod,thelender[servicer]isrequiredtoengageinonly:* d,d ,t t +  '' Lessthan91DaysDelinquent(121days) |  91120DaysDelinquent(121180) '|q'Two(2)diligent*telephoneefforts || One(1)diligent*telephoneeffort +|+  Uponreceiptofloanpayment,correctaddressortelephonenumber,orreturnedcheck,orexpirationofthedefermentorforbearanceNote:Thedaysinparenthesisrepresenttherequirementsforloaninstallmentsmadelessfrequentlythanmonthly.*Diligenteffortsfortelephonecontactaredefinedas:0..asuccessfulefforttocontacttheborrowerbytelephone;0..atleasttwounsuccessfulattemptstocontacttheborrowerbytelephoneatanumberthatthelenderreasonablybelievestobetheborrower'scorrecttelephonenumber;or0..anunsuccessfulefforttoascertaintheborrower'scorrecttelephonenumber,includingbutnotlimitedto,adirectoryassistanceinquiryastotheborrower'stelephonenumberandadiligentefforttocontacteachreference,relative,andindividualidentifiedinthemostrecentloanapplicationforthatborrowerthatthelenderholds.Thelender[servicer]maycontactaschoolofficialotherthanthefinancialaidadministratorwhoreasonablymaybeexpectedtoknowtheborrower'saddress. Delinquent151DaysorMore (the211thdayforloanspayableininstallmentslessfrequentthanmonthly):Thefinaldemandlettershouldbesenttotheborrowerrequiringrepaymentoftheloaninfullandnotifyingtheborrowerthatadefaultwillbereportedtoanationalcreditbureau.Thelender[servicer]shallallowtheborroweratleast30daysafterthedatetheletterismailedtorespondtothefinaldemandletterandtobringtheloanoutofdefaultbeforefilingadefaultclaimontheloan. LoanEndorsers XXXIj `CG TimesW1IDuringthedelinquencyperiod(1180days;240daysifinstallmentslessfrequentthanmonthly)thelender[servicer]shallXXXc=(hH  Z 6Times New Roman Regularc"XXXIj `CG TimesW1I0..makeadiligentefforttocontacttheendorserbytelephone.0..sendtheendorserontheloan two lettersadvisingtheendorserofthedelinquentstatusoftheloanandurgingtheendorsertomaketherequiredpaymentsontheloan.0.. Atleastoneletter mustwarntheendorserthatiftheloanisnotpaid,thelenderwillassigntheloantotheguarantyagencythat,inturn,willreportthedefaulttoallnationalcreditbureaus.Inaddition,thelettershouldstatethattheagencymayinstituteproceedingstooffsettheendorser'sStateandFederalincometaxrefunds,garnishtheendorser'swages,andbringsuitagainsttheendorsertocompelloanrepayment.0..onorafterthe151stdayofdelinquency(the211thdayforloanspayableininstallmentslessfrequentthanmonthly)sendafinaldemandlettertotheendorserrequiringrepaymentoftheloaninfullandnotifyingeachonethatadefaultwillbereportedtoanationalcreditbureau.Thelendershallallowtheborroweratleast30daysafterthedatetheletterismailedtorespondtothefinaldemandletterandtobringtheloanoutofdefaultbeforefilingadefaultclaimontheloan.XXXE* `CG TimesE SkipTracingRequirements :Unlessthefinaldemandletterspecifiedin Delinquent151DaysorMoresectionabovehasalreadybeensent,thelender[servicer]shallbegintoattemptdiligentlytolocatetheborrowerthroughtheuseofnormalcommercialskip-tracingtechniqueswithin10daysofitsreceiptofinformationindicatingthatitdoesnotknowtheborrower'scurrentaddress.Theseeffortsmustinclude,butarenotlimitedto,makingadiligentefforttocontacteachendorser,relative,reference,andindividualandentityidentifiedintheborrower'sloanfile.Forthispurpose,alender's[servicers]contactwithaschoolofficialwhomightreasonablybeexpectedtoknowtheborrower'saddressmaybewithsomeoneotherthanthefinancialaidadministratoridentifiedontheloanapplication.Theseeffortsmustbecompletedbythedateofdefaultwithnogapofmorethan45daysbetweenattemptstocontactthoseindividualsorentities.Uponreceiptofinformationindicatingthatitdoesnotknowtheborrower'scurrentaddress,thelendershalldiscontinuethecollectioneffortsdescribedintheparagraphsaboveskiptracingrequirements.Ifthelender[servicer]isunabletoascertaintheborrower'scurrentaddressdespiteitsperformanceoftheactivitiesdescribedinthefirstparagraphabove,thelender[servicer]isexcusedthereafterfromperformanceofthecollectionactivitiesunlessitreceivescommunicationindicatingtheborrower'saddressbeforethe151stdayofdelinquency(the211thdayforloanspayableinlessfrequentinstallmentsthanmonthly).SkipTracingForLoanEndorsers:XXXIj `CG TimesW1IUnlessthefinaldemandletterXXXE* `CG TimesEspecifiedin Delinquent151DaysorMoresectionXXXIj `CG TimesW1Iabovehasalreadybeensent,uponreceivinginformationindicatingthatitdoesnotknowtheendorser'scurrentaddressortelephonenumber,thelender[servicer]mustdiligentlyattempttolocatetheendorserthroughtheuseofnormalcommercialskip-tracingtechniques.Thiseffort must includeaninquirytodirectoryassistance.XXXE* `CG TimesE PreclaimsAssistance: Thelender[servicer]shallrequestpreclaimsassistancefromtheloanguarantyagencywithin10daysbeforeorafterthedatetheagencyestablishedthatitwouldfirstprovideassistance.  November1986Regulations   Delinquency Forpurposesofthissection,delinquencyonaloanbeginsonthefirstdayaftertheduedateofthefirstmissedpaymentnotlatermade.Ifapaymentismadelate,thefirstdayofdelinquencyisthedayaftertheduedateofthenextmissedpaymentnotlatermade. 1to30DaysDelinquent: Twowrittennoticesorcollectionlettersshouldbesenttotheborrower(unlesstheborrower'saddressisunknown). 31to60DaysDelinquent: Multiplephoneattemptsshouldbemadeortwoletterssentifunabletocontacttheborrowerbyphone.Lettersincludereferencestoconsequencesofdefault,creditbureaureporting,andlawsuit. 61150DaysDelinquent: Multiplephoneattemptsshouldbemadeoronelettersentduringeach30dayperiodifunabletocontacttheborrowerbyphone.Thelettermustbeasforcefulasthelettersdescribedinthe3160dayperiod. 151180DaysDelinquent: Afinaldemandlettershouldbe sent(unlesstheborrower'saddressisunknown).Thelender[servicer]shouldallowatleast30daysfortheborrowertorespondbeforefilingadefaultclaimontheloanorreportingthatdefaulttoacreditbureau. SkipTracingRequirements :Thelender[servicer]shallbegintodiligentlyattempttolocatetheborrowerthroughtheuseofnormalcommercialskip-tracingtechniqueswithin10daysofitsreceiptofinformationindicatingthatitdoesnotknowtheborrower'scurrentaddress.Theseeffortsmustinclude,butarenotlimitedto,makingadiligentefforttocontacteachendorser,relative,reference,andanyotherindividualandentityidentifiedintheborrower'sloanfile. PreclaimsAssistance: Thelender[servicer]shallrequestpreclaimsassistancefromtheloanguarantyagencywithin10daysofthedatetheagencyestablishedthatitwouldfirstprovideassistance. ManagementAssertion @..  LenderAssertion XXXc=(hH  Z 6Times New Roman RegularcDuringtheyearended[m/d/y,ABCLender]compliedwiththeduediligencerequirementsforcollectionofdelinquentloans,includingtherequirementsforskiptracingorpreclaimsassistancesetforthin34CFR682.411(c)(m).XXXE* `CG TimesE   ServicerAssertion   XXXc=(hH  Z 6Times New Roman RegularcForloansservicedduringtheyearended[m/d/y,XYZServicer]compliedwith"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewith"theduediligencerequirementsforcollectionofdelinquentloans,includingtherequirementsforskiptracingorpreclaimsassistancesetforthin34CFR682.411(c)(m).XXXUk)L  Z (CG Times RegularUXXXE* `CG TimesE SuggestedProceduresforExaminingCompliance (Note:ThepractitionermaywanttoperformtheseproceduresinconjunctionwiththeprocedurestotestComplianceRequirement2IndividualRecordReview.) a.0..Obtainandreviewthelenders[servicers]writtencollectionprocedures.Ifapplicable,obtainthesamplecollectionlettersandlistofsystemcodesforcollectionefforts.b.0..Fromthedelinquencyreport,selectasampleofloans.Determinebyinquiryofthelender[servicer]astotheapplicabilityofthe1992regulationsorthe1986regulationsfortheloanssampled.Verifythecalculationofdelinquencyperiods.   LoansCoveredbythe1992Regulations   c.0..Forloansthatweredelinquentfrom1to10days,determineifthelenders[servicers]recordsdocumentthattherequiredwrittennoticeorcollectionletterwassenttotheborrower.Verifytheletterinformedtheborrowerofthedelinquencyandurgedtheborrowertomakepaymentssufficienttoeliminatedelinquency.d.0..Forloansthatweredelinquentbetween11to180days(11to240forloansrepayableininstallmentslessfrequentlythanmonthly)determineifthelenders[servicers]recordsdocumentthattherequiredtelephoneeffortsweremadeand/orcollectionlettersweresenttotheborrowers.Verifythatatleasttwooftheletterswarnedtheborrowerofpossibleassignmentoftheloantotheguarantyagency,reportingthedefaulttoallnationalcreditbureaus,offsetofincometaxrefundstogarnishwagesandsuit.e.0..Forloansthatweredelinquentmorethan150days(the211thdayforloanspayableininstallmentslessfrequentthanmonthly)determineifthelenders[servicers]recordsdocumentthatthefinaldemandletterXXXIj `CG TimesW1IrequiringrepaymentoftheloaninfullandnotifyingtheborrowerthatadefaultwillbereportedtoanationalcreditbureauXXXE* `CG TimesEԀwassenttotheborrower.f.0..LoanEndorserProcedures:Forasampleofloansdelinquentfrom1180days(240daysforloansrepayableininstallmentslessfrequentlythanmonthlydetermineifthelenders[servicers]recordsdocumentthatthelender[servicer]madeadiligentefforttocontacttheendorserbyphone,senttherequiredlettersandfinaldemandletter,ifapplicable,inaccordancewithrequirements.g.0..SkipTracingProcedures:Fromthesampleofdelinquentloanswhereafinaldemandletterwasnotsenttotheborrower,determineifthelenders[servicers]recordsdocumentthatthelender[servicer]attemptedtocontacteachendorser,relative,reference,individualandentityidentifiedintheborrowersloanfilewithin10daysofreceiptofinformationindicatingthatitdidnotknowtheborrower'scurrentaddress.Determineiftheseeffortswerecompletedbythedateofdefaultwithnogapofmorethan45daysbetweenattempts.Determineifthelenders[servicers]effortsforloanendorsersincludedaninquirytodirectoryassistance.h.0..PreclaimsAssistanceProcedures:Obtainandreviewtheagreementtheguarantyagencyhaswiththelenderthatestablishesthetimeperiodforpreclaimsassistance.Fromthepopulationofdelinquentordefaultedloansdeterminetheloanswhererequiredpreclaimsassistancefromtheloanguarantyagencyshouldhavebeenrequestedbythelender[servicer].Forasampleoftheloans,determineifthelenders[servicers]recordsdocumentthatpreclaimsassistancewasrequestedwithin10daysbeforeoraftertheestablishedtimeperiod. @..P LoansCoveredbythe1986Regulations ̇c.0..Forloansthatweredelinquentfrom1to30days,determineifthelenders[servicers]recordsdocumentthattherequirednumberofwrittennoticesorcollectionlettersweresenttotheborrowers.d.0..Forloansthatweredelinquentbetween31to60days,determineifthelenders[servicers]recordsdocumentthatmultipletelephoneeffortsweremadetocontacttheborroweroratleasttwolettersweresenttotheborrowerifthelender[servicer]wasunabletocontacttheborrowerbyphone.e.0..Forloansthatweredelinquentbetween61to150days,determineifthelenders[servicers]recordsdocumentthatmultipletelephoneeffortsweremadetocontacttheborroweroratleastoneletterwassenttotheborrowerifthelender[servicer]wasunabletocontacttheborrowerbyphone.f.0..Forloansthatweredelinquent151180days,determineifthelenders[servicers]recordsdocumentthatafinaldemandletterwassenttotheborrower.g.0..SkipTracingProcedures:Fromthesampleofdelinquentloans,determineifthelenders[servicers]recordsdocumentthatthelender[servicer]attemptedtocontacteachendorser,relative,reference,individualandentityidentifiedintheborrowersloanfilewithin10daysofreceiptofinformationindicatingthatitdidnotknowtheborrower'scurrentaddress.h.0..PreclaimsAssistanceProcedures:Obtainandreviewtheagreementtheguarantyagencyhaswiththelenderthatestablishesthetimeperiodforpreclaimsassistance.Fromthepopulationofdelinquentordefaultedloansdeterminetheloanswhererequiredpreclaimsassistancefromtheloanguarantyagencyshouldhavebeenrequestedbythelender[servicer].Foreachofthoseloans,determineifthelenders[servicers]recordsdocumentthatpreclaimsassistancewasrequestedwithin10daysoftheestablishedtimeperiod.  11.0..DUEDILIGENCETIMELYCLAIMFILINGSBYLENDERSORSERVICERS  ComplianceRequirementTimelyFilingofClaims Lenders[servicers]arerequiredtotimelyfileclaimswiththeguarantyagencyforpaymentofdeath,disability,closedschools,falsecertification,bankruptcyanddefaultclaims.Eachtypeofclaimhasaseparatetimelyfilingrequirement.*0..Deathordisabilityclaimsmustbefiledwithin60daysofthedateonwhichthelender[servicer]determinesthataborrowerhasdiedoristotallyandpermanentlydisabled[34CFR682.402(g)(2)(i)].*0..Closedschoolclaimsmustbefilednolaterthan60daysaftertheborrowersubmitstothelender/servicerthewrittenrequestandswornstatementdescribedin34CFR682.402(d)orafterthelender/servicerisnotifiedtofileaclaimbytheSecretary,theSecretary'sdesignee,ortheguarantyagency[34CFR682.402(g)(2)(ii)].*0..Falsecertificationclaimsmustbefilednolaterthan60daysaftertheborrowersubmitstothelender[servicer]thewrittenrequestandswornstatementdescribedin34CFR682.402(e)orafterthelender/servicerisnotifiedtofileaclaimbytheSecretary,theSecretary'sdesignee,ortheguarantyagency[34CFR682.402(g)(2)(iii)].*0..Bankruptcyclaimsmustbefiledwithin:(1)XXXIj `CG TimesW1IԀXXXE* `CG TimesE30daysafterthedateonwhichthelender[servicer]receivesnoticeofthefirstmeetingofcreditorsunless,inthecaseofaproceedingunderChapter7,thenoticestatesthattheborrowerhasnoassetsXXXIj `CG TimesW1I[34CFR682.402(g)(2)(iv)(A)]XXXE* `CG TimesE;or(2)XXXIj `CG TimesW1I15daysafterthelender[servicer]isservedwithacomplaintormotiontohavetheloandeterminedtobedischargeableongroundsofunduehardship,or,ifthelender[servicer]securesanextensionoftimewithinwhichananswermaybefiled,25daysbeforetheexpirationofthatextendedperiod,whicheverislater[34CFR682.402(g)(2)(iv)(B)];or(3)XXXE* `CG TimesE30daysafterthelender[servicer]receivesanoticefromthecourtstatingthataChapter7noassetcasehasbeenconvertedtoanassetcase[34CFR682.402(f)(4)].*0..Defaultclaimsmustbefiledwiththeguarantyagencybythelender/servicerwithin90daysofdefault[34CFR682.406(a)(5)].Thelender/servicerisrequiredtomaintainrecordsnecessarytodocumentthevalidityofaclaimagainstaloanguarantee[34CFR682.404(g)(1)and34CFR682.414(a)(3)(ii)].Itemstobefiledbythelender[servicer]withtheguarantyagencyinclude:0..0..Theoriginalpromissorynote.0..0..Theloanapplication.0..0..Inthecaseofadeathclaim,thosedocumentsthatformedthebasisforthedeterminationofdeathasdescribedin34CFR682.402(b).0..0..Inthecaseofadisabilityclaim,acopyofthecertificationofdisabilitydescribedin34CFR682.402(c)(2).0..0..Inthecaseofaclosedschoolclaimthedocumentationdescribedin34CFR682.402(d)(3),oranyotherdocumentationastheSecretarymayrequire.0..0..Inthecaseofafalsecertificationclaim,thedocumentationdescribedin34CFR682.402(e)(3).0..0..Inthecaseofabankruptcyclaim:Evidencethatabankruptcypetitionhasbeenfiled,allpertinentdocumentssenttoorreceivedfromthebankruptcycourtbythelender,andanassignmenttotheguarantyagencyofanyproofofclaimfiledbythelenderregardingtheloan; AND astatementofanyfactsofwhichthelenderisawarethatmayformthebasisforanobjectionorexceptiontothedischargeoftheborrower'sloanobligationinbankruptcyandalldocumentssupportingthosefacts[34CFR682.402(g)(1)(v)]. ManagementAssertion   LenderAssertion   XXXc=(hH  Z 6Times New Roman RegularcDuringtheyearended[m/d/y,ABCLender]compliedwithdeadlinesfortimelyfilingofclaimswiththeguarantyagencyconcerningdeath,disability,falsecertification,closedschools,orbankruptcycontainedin34CFR682.402(b),(c),(d),(e)and(f)andfordefaultclaimscontainedin34CFR682.406(a)(5).Duringtheyearended[m/d/y,ABCLender]properlycategorizedamountspertainingtoclaimsintheEDForm799.XXXE* `CG TimesE   ServicerAssertion   XXXc=(hH  Z 6Times New Roman RegularcForloansservicedduringtheyearended[m/d/y,XYZServicer]compliedwith"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewith"deadlinesfortimelyfilingofclaimswiththeguarantyagencyconcerningdeath,disability,falsecertification,closedschools,orbankruptcycontainedin34CFR682.402(b),(c),(d),(e)and(f)andfordefaultclaimscontainedin34CFR682.406(a)(5).Forloansservicedduringtheyearended[m/d/y,XYZServicer]accuratelycategorized"andasof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementsforaccuratelycategorizing"amountspertainingtoclaimsintheEDForm799.XXXE* `CG TimesE$   SuggestedProceduresforExaminingCompliance$   a.0..Selectasamplefromallloansonwhichadeath,disability,closedschool,falsecertification,bankruptcyordefaultclaimwasfiledanddetermineifthelenders[servicer's]recordsdocumentthataclaimwasfiledinatimelymannerwiththeguarantyagency.b.0..Selectasampleofclaimsrejectedduringtheperiodcoveredbymanagementsassertionanddeterminewhetherthelender[servicer]eitherresubmittedtheclaimtimelyorrecategorizedtheloantoanuninsuredloanontheEDForm799.  12.0..CURES  ComplianceRequirementCuringDueDiligence/TimelyFilingViolations Alender/servicermay"cure"aviolationofcollectionduediligencerequirementsorthe90daydeadlineforthefilingofdefaultclaims,inordertoreinstatetheloanguarantee,andthelender'srighttointerestandspecialallowance.GuarantyAgencyDirectorLetter,88G138, PolicyforWaivingtheSecretarysRightToRecoverorRefusetoPay,InterestBenefits,SpecialAllowance,andReinsuranceonStafford,andConsolidationProgramLoansInvolvingLendersViolationsofFederalRegulationsPertainingtoDueDiligenceinCollectionorTimelyFilingofClaimsisapplicabletoduediligenceviolationsonloansforwhichthefirstdayofdelinquencyoccurredonorafterMarch10,1987(theeffectivedateoftheNovember10,1986duediligenceregulations)andtotimelyfilingviolationsoccurringonorafterDecember26,1986whetherornottheaffectedloanshavebeensubmittedasclaimstotheguarantyagency.Aviolationwithrespecttotheduediligencerequirementsin34CFR682.411meansthefailuretotimelycompletearequireddiligentphonecontacteffort,thefailuretotimelysendarequiredletter(includingrequestforpreclaimsassistance),orthefailuretotimelyengageinarequiredskiptracingactivity.Under34CFR682.200,defaultonaFFELProgramloanoccurswhenaborrowerfailstomakeapaymentwhendue,providedthisfailurepersistsfor180daysforloanspayableinmonthlyinstallments,orfor240daysforloanspayableinlessfrequentinstallments.The90dayfilingperiodapplicabletoFFELProgramdefaultclaimsissetforthin34CFR682.406(a)(5).The90dayfilingperiodbeginsattheendofthe180/240daydefaultperiod.Whenreviewingloansthathavebeencured,thepractitionershoulddeterminewhatcureappliestotheloans.0..Retrospectiveperiod󀄀OneormoreduediligenceviolationsoccurringduringtheperiodMarch10,1987τApril30,1988.0..Prospectiveperiod󀄀DuediligenceviolationsoccurringonorafterMay1,1988.Thefollowingguidanceonlypertainstotheprospectiveperiodasmostloanstestedbythepractitionershouldfallintothatcategory.Thepractitionershouldreferto34CFRPart682AppendixDfordetailedinformationontheretrospectiveperiod.CuresforDueDiligenceViolationsA.0..Ifalender/servicerfailstoperformoneactivitywhenrequiredbutisnomorethanfivedayslateinperformingthatactivity(fortransfersnomorethan20dayslate)theviolationisexcused.B.0..Ifoneortwoactivitiesareomittedorperformedmorethanfivedayslate(fortransfer,morethan20dayslate)andthegapisnogreaterthan45days(fortransfers,nogreaterthan60days)theviolation(s)isexcused.However,thelender/servicermustcompleteallrequiredactivitiesbeforetheclaimfilingdeadline.Interestandspecialallowancewillbelimitedto90daysifthemissedactivitiesarenotperformedbeforeday270.Ifthepreclaimisnotcompletedbyday240,theninterestandspecialallowancewillnotbepaidforthemostrecent180dayspriortodefault.Apreclaimmustbeineffect30daysbeforeaclaimwillbepaid.Noadditionalinterestwillbepaidforthisperiod.C.0..3Activities󀄀Ifthreeactivitieswereomittedorperformedmorethanfivedayslate(fortransfers,morethan20dayslate)andthegapisnogreaterthan45days(fortransfers,nogreaterthan60days)thelender/servicermustlocatetheborrowerand:0..Step1.04..4Within15daysoflocationsendanewRepaymentAgreementtotheborrowerthatcomplieswiththe10yearrepaymentlimitationssetoutin34CFR682.209(a)(7)andastronglywordedcollectionletter.0..Step2.04..4Iftheborrowerdoesnotrespondwithin1520daysofStep1,attempttocontacttheborrowerbyphone.0..Step3.04..4Iftheborrowerdoesnotrespondwithin510daysofStep2,againattempttocontacttheborrowerbytelephone.0..Step4.04..4Iftheborrowerdoesnotrespondwithin510daysofStep3,sendaforcefulcollectionletterrequestingentirebalanceoftheloan.0..Step5.04..4Iftheborrowerdoesnotrespondwithin30daysofStep4,filetheclaimwithin60daysofStep4.Principal,Interest,andSpecialAllowancewillbepaidonlytothedateofthefirstunexcusedviolation.0..Iftheborrowerreturnsthesignedagreementorsendsapayment,considertheborrowercurrent.Principalwillbepaid.InterestandSpecialAllowancewillnotbepaidfromtheearliestunexcusedviolationtoreinstatement.Note:Asacuremaybeobtainedthroughthereceiptofasignednewrepaymentagreementoronefullpayment,somelenders[servicers]maychoosetosubstitutethefollowing morethan3activitiesprocessforthe 3activitiesprocess.D.0..Morethan3Activities󀄀Ifmorethanthreeactivitieswereomittedorperformedmorethan5dayslate(fortransfers,morethan20dayslate)orifthereisagapof46daysormoreandatleastoneviolation(fortransfers,61daysormore)thelender[servicer]mustXXXc=(hH  Z 6Times New Roman Regularc"XXXE* `CG TimesE0..1.0..locatetheborrower0..2.0..obtainanewrepaymentagreementORobtainonefullpayment(evidencemustberetained).TheborroweriscurrentifeitheractionaboveoccursandinterestandspecialallowanceresumesCureforTimelyFilingViolationsSameproceduresasfor"C.3Activities"above. ManagementAssertion   LenderAssertion   XXXc=(hH  Z 6Times New Roman RegularcForloanswithtimelyfilingviolationsorduediligenceviolationsthatwerecuredduringtheyearended[m/d/y,ABCLender]documentedthatitperformedthecureproceduresrequiredby34CFR682AppendixD[Bulletin88G138].Forloansonwhichacurewasrequiredbutthatwerenotcuredduringtheyearended[m/d/y,ABCLender]properlycategorizedtheloansintheEDForm799submittedtoED.XXXE* `CG TimesE   XXXc=(hH  Z 6Times New Roman RegularcServicerAssertion   Forloanswithtimelyfilingviolationsorduediligenceviolationsthatwerecuredduringtheyearended[m/d/y,XYZServicer]documentedthatitperformed"and,asof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstoperform"cureproceduresrequiredby34CFR682AppendixD[Bulletin88G138].Forloansonwhichacurewasrequiredbutthatwerenotcuredduringtheyearended[m/d/y,XYZServicer]properlycategorized"and,asof[m/d/y,XYZServicer]hadeffectiveinternalcontrolovercompliancewithrequirementstoproperlycategorize"theloansintheEDForm799preparedandsubmittedtoEDonbehalfofourlenderclientsorthebillinginformationpreparedby[XYZServicer]andsubmittedtoourlenderclients.XXXE* `CG TimesE SuggestedProceduresforExaminingCompliance a.0..Forasampleof"cured"loansidentifiedinPartVoftheEDform799s[orservicerbillinginformation]verifythatthelenders[servicers]recordsdocumentthatitperformedtherequiredcureproceduresdescribedin34CFRPart682AppendixDsectionI.C;andDorE.b.0..Forcuredloansonwhichthelender[servicer]obtainedanewrepaymentagreement,verifythatthenewrepaymentagreementcomplieswiththetenyearrepaymentlimitationssetoutin34CFR682.209(a)(7).c.0..Forcuredloansonwhichthelender[servicer]obtainedonefullpayment,obtainthecopyofthefullpaymentcheckand/orotherdocumentationmaintainedbythelender[servicer]andverifythatthefullpaymentcomplieswiththetermsofthemostcurrentrepaymentscheduleandthatthecuringpaymentwasvalid[34CFRPart682AppendixDsectionI.A].Forexample,NSFchecksareaninvalidformofcure;paymentsmustbemadebytheborrowerorapartyonbehalfoftheborrowerhavingnofinancialinterestintheloan.d.0..Verifythatthelender[servicer]accuratelyadjusteditsEDForm799torebateinterestand/orspecialallowance,ifany,duringnonreinsuredperiods.(Note:ThepractitionermaywanttoperformthisstepinconjunctionwiththeprocedurestotestComplianceRequirement5.)e.0..Verifythatthelender[servicer]properlycategorizedloansforwhichacurewasrequiredbutwhichwereNOTcuredoneithertheEDForm799orifapplicablethebillinginformation.XXXUk)L  Z (CG Times RegularU    @..8 Uk)L  Z (CG Times RegularU  SECTIONIIIXXXUk)L  Z (CG Times RegularUԈ   @..Uk)L  Z (CG Times RegularUALTERNATIVEANDCOMBINEDENGAGEMENTSFOR@..H CERTAINLENDERSUSINGSERVICERSXXXUk)L  Z (CG Times RegularU  WhenalenderusesservicerstoserviceallorpartofitsFFELProgramloanportfolio,thelendersmanagementmayormaynotbeabletomakealloftheassertionsrequiredinSectionIIofthisGuide.Inthosesituations,EDwillacceptasmeetingthelenderauditrequirementanindependentaccountantsreport(s)basedonanalternativeorcombinedengagementasdiscussedinthissection.Thissectionprovidesguidanceonwhenthealternativeorcombinedengagementwouldbeacceptableandtherequirementsforsuchanengagement.Pleasenotethatwhenthecircumstancesexistthatwouldallowthealternativeorcombinedengagementtobeused,EDisnotmandatingsuchanengagement.Ifthelenderwantsastandardengagementandisabletomaketherequiredassertions,itisfreetomakethatchoice.$    PREREQUISITEFORALTERNATIVE(ORCOMBINED)ENGAGEMENT$    Aprerequisiteforthealternativeorcombinedengagementisthatthelenderobtainsfromtheservicer(s)anaudit/attestationreportthatmeetstherequirementsdescribedinthissection.Ifareportmeetingtheserequirementscannotbeobtainedfromtheservicer,astandardengagementisrequired,withthelender'spractitionerperformingexaminationproceduresattheservicer,ifnecessary.$    ADDITIONALREQUIREMENTS$      AlternativeEngagement  Whenallofthelender'sFFELProgramloanportfolioisservicedbyoneormoreservicersthatperformthefunctionsgovernedbythecompliancerequirementsidentifiedinSectionIIofthisGuide,andthelenderisnotabletomakeanyoftherequiredassertionsforastandardengagement,thelendercouldengageapractitionertoperformanagreeduponproceduresattestationengagementrelativetothelendermanagementsassertionsrequiredbythissection(seethe ManagementAssertionsandAgreedUponProceduressectionherein).  CombinedEngagement  WhenthelenderservicespartofitsFFELProgramloanportfolioandpartisservicedbyoneormoreservicers(anditisnotimmaterial),thelendercouldengageapractitionerto:..a.0..Performanexaminationlevelattestationengagement(standardengagement)onthelendermanagement'sassertionsapplicabletotheportionoftheFFELProgramloanportfolioservicedbythelender,anḋ..b.0..Performanagreeduponproceduresattestationengagement(alternativeengagement)onthelendermanagementsassertionsdiscussedhereinfortheportionoftheFFELProgramloanportfolioservicedbytheservicer.$    SERVICERAUDIT/ATTESTATIONREPORTREQUIREMENTS$      Aservicersindependentaccountantsaudit/attestationreportmustmeetallofthefollowingrequirementstobeacceptableforuseasabasisforanalternativeorcombinedengagement.1.0..Theaudit/attestationengagementmustbeconductedinaccordancewiththestandardsforfinancialrelatedauditsinGovernmentAuditingStandards,andthereportmustincludeanindependentaccountantsopinionwithrespecttotheservicerscompliancewiththespecifiedcompliancerequirementsidentifiedinSectionIIofthisGuidethatpertaintothefunctionscarriedoutbytheserviceorganization.Thiscanbethepractitioner'sdirectopiniononcomplianceoranopiniononmanagement'sassertionsaboutcompliance.Ifthelatter,theserviceorganizationmanagement'sassertionsshouldbethesameasorsimilartotheassertionsidentifiedinSectionIIforastandardattestationengagementofalender.TheguidanceinSectionIofthisGuideandSectionIV,shouldbeadaptedasappropriate.2.0..Thescopeoftheaudit/attestationengagementcanbeserviceorganizationwideorcanbelimitedtocertainlenders'portfolios,inwhichcase,onlythoselenderswhoseportfoliosarecoveredbytheserviceraudit/attestationreportcanusethereportasabasisforanalternativeorcombinedengagement.3.0..Theperiodcoveredbytheaudit/attestationengagementmust:1)coveratleastthesamelengthofperiodasthelender'sreportingperiod(generally12monthsexceptifthelenderelectsatwo-yearinitialreport),and2)endwithin6monthsofthelender'sreportingperiod.However,tobeofuse,thereportshouldbeavailableintimeforthelender'saudittobecompletedinatimelymanner.4.0..Theaudit/attestationreportmustspecifywhatlenders,functions,andcompliancerequirementsarecovered.5.0..XXXUg)Lr  Z (CG Times RegularUIfthereportdisclosesnoncompliance(ineithermanagement'sassertions,theindependentaccountantsreport,orsupplementalschedule),thepractitionersaudit/attestationreportorsupplementalschedulemustdisclosewhetherthefindingsaddressXXXc=(hH  Z 6Times New Roman RegularcFFELProgramcompliancerequirementfunctionsforwhichthelenderhascontractedtheservicertoperform.(Note:IftherewerenofindingsrelatedtotheFFELProgramcompliancefunctionsforwhichthelenderhascontractedtheservicertoperform,aseparatecommunicationfromtheservicertothelendershouldsostate.SeeSectionI, ManagementsReportingResponsibilities.)6.0..Thesupplementalscheduletitled, ScheduleofFindingsandQuestionedAmountsbyComplianceRequirement,mustcontainalltherequiredattributesandelementsidentifiedinAppendixB,Example4ofthisGuide.XXXUg)Lr  Z (CG Times RegularUԀXXXUk)L  Z (CG Times RegularU   MANAGEMENTASSERTIONSANDAGREEDUPONPROCEDURES  XXXc=(hH  Z 6Times New Roman RegularcWhenthelenderelectstousethealternativeengagement,lendermanagementmustpreparethewrittenassertions,andmustengageapractitionertoperformtheagreeduponprocedures,thatfollow.Theseassertionsandagreeduponproceduresarealsorequiredinacombinedengagement(togetherwiththestandardreport).XXXUk)L  Z (CG Times RegularU  1...COMPILATIONOFBILLINGINFORMATION  ComplianceRequirementCompilationofBillingInformationfromServicer Theservicesprovidedbyservicersvaryfromlendertolender.InsomecasestheservicerpreparestheEDForm799forthelenderbasedontheservicerrecords.InothercasestheservicerprovidesinformationfromwhichthelenderpreparestheEDForm799.Thiswouldalwaysbethecasewhenthelenderusesmorethanoneservicerand/orservicespartofitsownportfolio.Thelenderwouldthenneedtocombinetheinformationfromtheservicer(s)andtheportfoliothatitservicestopreparetheEDForm799. ManagementAssertion(applicablewhenthelenderpreparestheEDForm799) TheinformationincludedintheEDForm799ssubmittedtoEDduringtheyearended[m/d/y]pertainingtoloansservicedbytheservicer(s)agreeswiththebillinginformationprovidedbytheservicer(s). AgreedUponProcedureToBePerformedbytheLenderPractitioner a.0..Compareandagreetheloaninformation(asadjusted)reportedintheEDForm799ssubmittedtoEDduringtheyeartothebillinginformationprovidedbytheservicer(s). ManagementAssertion(applicablewhentheserviceorganizationpreparestheEDForm799) TheEDForm799ssubmittedtoEDduringtheyearwerepreparedby(insertnameorservicer). AgreedUponProcedureToBePerformedbytheLenderPractitioner b.0..Reviewthesubmissionsofbillinginformation(andlender/servicercontract,ifnecessary)fromtheservicertothelendertodeterminewhetheritincludedaservicerpreparedEDForm799.   2.0..SERVICEORGANIZATIONAUDIT/ATTESTATIONREPORT   ComplianceRequirementServicerAudit/AttestationReportMeetsRequirementsforAlternativeEngagement Aservicersreportmustmeettheservicer'saudit/attestationreportrequirementsidentifiedonpageIII(SERVICE REPORT(2  ՀofthisGuide.  ManagementAssertion Theservicersaudit/attestationreportmeetstherequirementsinSectionIIIoftheAuditGuideforthealternativemethodengagement. AgreedUponProceduretobePerformedbytheLenderPractitioner a.0..Obtainandreadallservicer(s)audit/attestationreport(s)obtainedbythelendertosatisfythealternativeengagementapproachandascertainthatthereport(s):0.. %"0..  Includeastatementthattheaudit/attestationengagementwasconductedinaccordancewithGovernmentAuditingStandards.0.. %"0..  Expressesanopiniononcompliance,ormanagementsassertionsoncompliance,withtheapplicablecompliancerequirementsinSectionIIoftheAuditGuide.0.. %"0..  Setsforththescopeoftheaudit/attestationengagement(organizationwideorlimitedtocertainlenders).0.. %"0..  Coversthesamelengthofperiodasthelender'sreportingperiod(generally12monthsexceptifthelenderelectsatwo-yearinitialreport),endingwithin6monthsoftheendofthelendersreportingperiod.0.. %"0..  Identifieswhatlenders,functions,andcompliancerequirementsarecoveredbytheaudit/attestationreport.0.. %"0..  DisclosesXXXUg)Lr  Z (CG Times RegularUԀwhetherthefindingsaddressXXXc=(hH  Z 6Times New Roman RegularctheFFELProgramcompliancerequirementfunctionsforwhichthelenderhascontractedtheservicertoperform;and0..0..Thesupplementalscheduletitled, ScheduleofFindingsandQuestionedAmountsbyComplianceRequirementcontainsalltherequiredattributesandelementsidentifiedinAppendixB,Example4ofthisGuide.XXXUg)Lr  Z (CG Times RegularUԀXXXUk)L  Z (CG Times RegularU  3...SERVICERREPORTFINDINGS     ComplianceRequirementLenderDisclosesAllNoncomplianceIncludedinServicerAudit/AttestationReportsorinSeparateServicerCommunications   Thiscompliancerequirementisselfexplanatory. ManagementAssertion   Allinstancesofnoncompliancereportedintheserviceraudit/attestationreport,includinganyXXXUg)Lr  Z (CG Times RegularUinthe ScheduleofFindingsandQuestionedAmountsbyComplianceRequirement.XXXUk)L  Z (CG Times RegularUԀthatrelateXXXc=(hH  Z 6Times New Roman RegularctoaFFELProgramcompliancerequirementfunctionforwhichthelenderhascontractedtheservicertoperformXXXUk)L  Z (CG Times RegularUaredisclosedbelow[inarepresentationlettertoDEFPractitioner].  AgreedUponProcedurestobePerformedbytheLenderPractitioner a.0..Reviewacopyoftheservicer(s)audit/attestationreport(s),includingany ScheduleofFindingsandQuestionedAmountsbyComplianceRequirement,transmittedtothelenderfromtheservicerthatreportsnoncompliance(materialandimmaterial)attheservicer.Confirmwiththeservicerthattherehasbeennoadditionalcommunicationtothelenderrelatingtononcomplianceotherthanthoseofwhichthepractitionerisaware.b.0..Reviewanycontractthelenderhaswithaservicer(s)todeterminetheFFELProgramcompliancerequirementsthelenderhascontractedwiththeservicer(s)toperform.c.0..Reportallfindingsofnoncomplianceidentifiedinthereport(s)thatXXXc=(hH  Z 6Times New Roman RegularcaddressanyFFELProgramcompliancerequirementfunctionforwhichthelenderhascontractedtheservicer(s)toperformandincludeasanelement,XXXU< `(CG TimesScalableUthepopulationofthelendersapplicabletransactionsadministeredbytheservicer.(SeeAppendixB,Example4)XXXUk)L  Z (CG Times RegularUXXXc=(hH  Z 6Times New Roman Regularc0..XXXUk)L  Z (CG Times RegularU    @..@ Uk)L  Z (CG Times RegularU  SECTIONIV  @..*  REPORTINGXXXUk)L  Z (CG Times RegularU  $    REPORTINGPACKAGEFORLENDERSANDSERVICERS$    Thefollowingrequiredmanagementandpractitionerreportscomprisethelender'sorservicersfullreportingpackage.   RequiredLenderReports  1.0..InformationSheet(Example1)2.0..CorrectiveActionPlanThisplanistobedevelopedbythelenderandshoulddescribethecorrectiveactiontakenorplannedinresponsetothefindingsidentifiedbythepractitioner.Theplanshouldalsoincludecommentsonthecorrectiveactiontakenonprioryearfindingsresultingfromaudits,guarantyagencyreviews,andEDprogramreviewsthateffectthecurrentexaminationobjective.(Example7)   RequiredServicerReports  1.0..InformationSheet(Example1)2.0..CorrectiveActionPlanThisplanistobedevelopedbytheservicerandshoulddescribethecorrectiveactiontakenorplannedinresponsetothefindingsidentifiedbythepractitioner.Theplanshouldalsoincludecommentsonthecorrectiveactiontakenonprioryearfindingsresultingfromaudits,lenderreviews,andEDprogramreviewsthateffectthecurrentexaminationobjective.(Example7)$    RequiredPractitionerReports$    Thefollowingcomprisethepractitionersreportingpackagetothelenderorservicer,asapplicable.1.0..A)0..StandardLenderEngagement:XXXc=(hH  Z 6Times New Roman RegularcReportonthepractitionersexaminationoflendermanagementswrittenassertionsaboutlenderscompliancewithspecifiedrequirements.(Example2)XXXUk)L  Z (CG Times RegularU..B)0..XXXc=(hH  Z 6Times New Roman RegularcServicerEngagement:Reportonthepractitionersexaminationofservicermanagementswrittenassertionsaboutservicerscompliancewith"andeffectivenessofservicersinternalcontrolovercompliancewith"specifiedrequirements.(Example3)XXXUk)L  Z (CG Times RegularU..C)0..LenderAlternativeEngagement:AreportbasedonanagreeduponproceduresattestationengagementonthelendersassertionsidentifiedinSectionIIIofthisGuide.(Example5)..D)0..CombinedEngagement:(i)XXXc=(hH  Z 6Times New Roman RegularcReportonthepractitionersexaminationoflendermanagementswrittenassertionsaboutlenderscompliancewithspecifiedrequirements.(Example2)XXXUk)L  Z (CG Times RegularUԀforthatportionoftheFFELProgramloanportfolioservicedbythelender;and(ii)reportbasedonanagreeduponproceduresattestationengagementonthelendersassertionsidentifiedinSectionIIIrelativetotheportionofthelendersFFELProgramloanportfolioservicedbyathirdpartyservicer(s).2.0..Ascheduleoffindingsandquestionedamountsbycompliancerequirement,includingmaterialnoncompliancefoundbythepractitionerordisclosedinmanagement'sassertions.(EachnoncompliancefindingshouldcontaintheelementsinExample4.)3.0..Acopyofwrittencommunicationsfromthepractitionertothelendersmanagementofanyinternalcontroldeficienciesnoted.(SeeReportingConsiderationsinSectionI.)4.0..Thepractitioner'scommentsonpriorauditresolutionmatters.Thereportshoulddisclosethestatusofmaterialfindingsandrecommendations(uncorrected)fromthepriortwoyearsrelatedexaminationsorauditsperformedbythepractitionerorbyotherpractitionersthatarerelatedtothelendersorservicersparticipationintheFFELProgram.(Example6)5.0..IfaseparatereportonillegalactsthatcouldresultincriminalprosecutionwassubmittedinaccordancewiththeinstructionsinSectionIofthisGuide,itshouldbeincludedaspartofthereportingpackage.    T$..  APPENDIXA  Ԉ  @.. REGIONALINSPECTORSGENERALFORAUDIT  X..@..d  Offices RegionalInspectorGeneralforAuditU.S.DepartmentofEducation/OIG3535MarketStreet,Room16280Philadelphia,Pennsylvania19104Phone:2155960262FAX:2155960124RegionalInspectorGeneralforAuditU.S.DepartmentofEducation/OIG1200MainTower,Room2130Dallas,Texas75202Phone:2147673826FAX:2147292024RegionalInspectorGeneralforAuditU.S.DepartmentofEducation/OIGExecutiveHillsNorth2ndFloor10220N.ExecutiveHillsBoulevardKansasCity,Missouri64153Phone:8168804024FAX:8168910815 @..tStatesCovered Connecticut,Delaware,DistrictofColumbia,Maine,Maryland,Massachusetts,NewHampshire,NewJersey,NewYork,Pennsylvania,PuertoRico,RhodeIsland,Vermont,VirginIslands,Virginia,WestVirginiaAlabama,Arizona,Arkansas,California,Florida,Georgia,Guam,Hawaii,Kentucky,Louisiana,Mississippi,Nevada,NewMexico,NorthCarolina,Oklahoma,SouthCarolina,Tennessee,TexasAlaska,Colorado,Idaho,Illinois,Indiana,Iowa,Kansas,Michigan,Minnesota,Missouri,Montana,Nebraska,NorthDakota,Ohio,Oregon,SouthDakota,Utah,Washington,Wisconsin,Wyoming@.. ASSISTANTINSPECTORGENERALFORINVESTIGATIONS X#_dAssistantInspectorGeneralforInvestigations#ddU.S.DepartmentofEducation/OIG600IndependenceAve.,SWRoom4122,MESWashington,D.C.202021510XXXUg)Lr  Z (CG Times RegularUPhone:2022058762FAX:2022059449XXXUk)L  Z (CG Times RegularU(AllstatesforMattersRequiringImmediateAction;seeSectionI, PractitionerQualificationsandResponsibilitiessubsection MattersRequiringImmediateAction.)        APPENDIXB  EXAMPLE1Page1of2    @..  ILLUSTRATIVEINFORMATIONSHEET  Ԉ   ..4..4` ..`  (PreparedbyLenderorServicerManagement)   (Note:ThisInformationSheetispreparedbythelenderorservicermanagement,asapplicable,fortheinformationofEDandisnotconsideredpartofthescopeofthepractitionersengagement.)@..T$..T$@..PARTNER:򀀀CPAFIRM'SNAME:򀀀ADDRESS:򀀀....򀀀....򀀀....TEL.NO.` ..` ......FAX.NO.` ..` ..LENDERORSERVICERAUDITED:򀀀PERIODAUDITED:򀀀LENDERORSERVICER'SADDRESS:򀀀ENTITYSIDNUMBER:򀀀....TEL.NO.` ..` (򀀀)򀀀򀀀....FAX.NO.` ..` (򀀀)򀀀򀀀..ProgramExamined:FFEL..84.032....򀀀O Lender: ....[ABCLenderID#]utilizesaFFELServicer(nameandaddress).ThefollowingarealltheFFELProgramcompliancerequirementfunctionsprovidedbythisServicerasat[m/d/y]:1.0..PrepareandsubmitEDForm799stoED0..4.0..SkipTracing2...RecordStudentStatusChangesh..h0..5.0..ClaimFilings3...Collections0` ..` 0..0h..h..6.0..ETC...(Note:Useasmanylinesasnecessaryfortheabovedata.Providetheabovedataforeachservicerutilized.)   XXXUg)Lr  Z (CG Times RegularU  APPENDIXB  EXAMPLE1Page2of2XXXUk)L  Z (CG Times RegularU   Servicer: (1)0..ThefollowingarealltheFFELProgramcompliancerequirementfunctionsperformedbyXYZServicerforourlenderclientsasat[m/d/y]:1.0..PrepareandsubmitEDForm799stoED0..4.0..SkipTracing2...RecordStudentStatusChangesh..h0..5.0..ClaimFilings3...Collections0` ..` 0..0h..h..6.0..ETC...(Note:Useasmanylinesasnecessaryfortheabovedata.)(2)0..Thefollowingisalistingofourlenderclientsasat[m/d/y]:LenderID4..4` ..` ..1111114..4` ..` ..h..h2222224..4` ..` ..h..h3333334444444..4` ..` ..h..h(Note:Useasmanylinesasnecessaryfortheabovedata.)&&&Ug)Lr  Z (CG Times RegularU (3)0..Thefollowingpertaintoourfinancialstatementaudit: (Note:ThisGuidedoesnotrequireServicerstodemonstratefinancialresponsibilityasdescribedin34CFR682.416(b),howeverEDrequeststhatServicersprovidethefollowinginformationpertainingtotheirfinancialstatementauditsonthisschedule.)a.0..LastPeriodAudited:򀀀b.0..PreparedinAccordanceWith:(forexample,accrualbasisinaccordancewithGAAP)c.0..PerformedinAccordancewith:(forexample,GAAS)d.0..Type/Entity:(forexample,SeparateFinancialStatementAuditofXYZorConsolidatedFinancialStatementAuditof[UVW])  X  , |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[XXXUk)L  Z (CG Times RegularU    T$..T$ APPENDIXB T$..T$ EXAMPLE2        ILLUSTRATIVEREPORTONLENDERMANAGEMENTSASSERTIONSABOUTCOMPLIANCEWITHSPECIFIEDFFELPROGRAMREQUIREMENTS  &&&Uk)L  Z (CG Times RegularUIndependentAccountantsReport  [Addressee]&&&U; `(CG TimesScalableUWehaveexaminedmanagement'sassertions,includedinitsrepresentationletter    ׀dated[date],that[ABCLender]compliedwith[listspecifiedcompliancerequirementsorattachinaccompanyingschedule],relativetothe[ABCLenders]participationintheFederalFamilyEducationLoanProgramduringtheyearended[date].Asdiscussedinthatrepresentationletter,managementisresponsiblefor[ABCLender's]compliancewiththoserequirements.Ourresponsibilityistoexpressanopiniononmanagement'sassertionsabout[ABCLenders]compliancebasedonourexamination.OurexaminationwasmadeinaccordancewithGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;standardsestablishedbytheAmericanInstituteofCertifiedPublicAccountants;andthe1996AuditGuide,ComplianceAudits(AttestationEngagements)forLendersandLenderServicersParticipatingintheFederalFamilyEducationLoanProgram(theGuide),issuedbytheU.S.DepartmentofEducation,OfficeofInspectorGeneral;and,accordingly,includedexamining,onatestbasis,evidenceabout[ABCLender's]compliancewiththoserequirementsandperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourexaminationprovidesareasonablebasisforouropinion.Ourexaminationdoesnotprovidealegaldeterminationon[ABCLender's]compliancewithspecifiedrequirements.Inouropinion,management'sassertionsthat[ABCLender]compliedwiththeaforementionedrequirementsfortheyearended[date]arefairlystated,inallmaterialrespects.    Thisreportisintendedsolelyfortheinformationoftheauditcommittee,management,andtheU.S.DepartmentofEducation.However,thisreportisamatterofpublicrecordanditsdistributionisnotlimited.[Signature]T$..[Date]XXXU) `(CG TimesScalableUԀ H  H XXXU< `(CG TimesScalableU   APPENDIXBEXAMPLE3      @..XXXc=(hH  Z 6Times New Roman Regularc ILLUSTRATIVEREPORTONSERVICERMANAGEMENTSASSERTIONSABOUTCOMPLIANCEWITHANDINTERNALCONTROLOVERCOMPLIANCEWITHSPECIFIEDFFELPROGRAMREQUIREMENTS    &&&-\ `-  IndependentAccountantsReport  [Addressee]-\ `-&&&-\ `-Wehaveexaminedmanagementsassertions,includedinitsrepresentationletter    ׀dated[date],that[XYZServicer]compliedwith[listspecifiedcompliancerequirementsorattachinaccompanyingschedule]relativeto[XYZServicers]administrationoftheFederalFamilyEducationLoanProgramonbehalfofitslenderclients[listlenderIDnumbersorattachinaccompanyingschedule]duringtheyearended[date]andabouttheeffectivenessof[XYZServicers]internalcontrolovercompliancewiththeaforementionedcompliancerequirementsasof[date].Asdiscussedinthatrepresentationletter,managementisresponsiblefor[XYZServicers]compliancewith"andtheeffectivenessofthe[XYZServicers]internalcontrolovercompliancewith"thoserequirements.Ourresponsibilityistoexpressanopiniononmanagementsassertionsabout[XYZServicers]compliancewith"andtheeffectivenessof[XYZServicers]internalcontrolovercompliancewith"thespecifiedcompliancerequirementsbasedonourexamination.XXX-*`-&&&-\ `-OurexaminationwasmadeinaccordancewithGovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStates;standardsestablishedbytheAmericanInstituteofCertifiedPublicAccountants;andthe1996AuditGuide,ComplianceAuditsforLendersandLenderServicersParticipatingintheFederalFamilyEducationLoan(FFEL)Program(theGuide),issuedbytheU.S.DepartmentofEducation,OfficeofInspectorGeneral;and,accordingly,includedobtaininganunderstandingoftheinternalcontrolovercompliancewiththespecifiedcompliancerequirements;testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolovercompliance;examining,onatestbasis,evidenceabout[XYZServicers]compliancewiththoserequirements;andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourexaminationprovidesareasonablebasisforouropinion.Ourexaminationdoesnotprovidealegaldeterminationon[XYZServicers]compliancewithspecifiedrequirements.&&&-2*0-&&&-\ `-Becauseofinherentlimitationsinanyinternalcontrolstructure,errorsorirregularitiesmayoccurandnotbedetected.Alsoprojectionsofanyevaluationoftheinternalcontrolovercompliancewiththespecifiedrequirementstofutureperiodsaresubjecttotheriskthatinternalcontrolovercompliancemaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewithcontrolpoliciesorproceduresmaydeteriorate.XXX-\ `-&&&-\ `-Inouropinion,managementsassertionsthat[XYZServicer]compliedwiththeaforementionedrequirementsfortheyearended[date]andthat[XYZServicer]maintainedaneffectiveinternalcontrolovercompliancewiththeaforementionedcompliancerequirementsasof[date]arefairlystated,inallmaterialrespectsXXX-\ `-.    &&&-\ `-Thisreportisintendedsolelyfortheinformationoftheauditcommittee,management,andtheU.S.DepartmentofEducation.However,thisreportisamatterofpublicrecordanditsdistributionisnotlimited.XXX-\ `-&&&-2*0-[Signature]..4..4..h..h..[Date]XXX-*`-T$.. APPENDIXB T$.. EXAMPLE4    @.. ILLUSTRATIVESCHEDULEOFFINDINGSANDQUESTIONEDAMOUNTSBYCOMPLIANCEREQUIREMENT   &&&-2*0-  ..&&&-<6X`(-&&&-2`-AsdiscussedinSectionI,management'sassertionsandthepractitioner'sissuedreportsareaprimarytoolusedbyprogrammanagersinmeetingtheirstewardshipresponsibilitiesinoverseeingtheseloanprogramsandassuringtheintegrityofthefundsandthereportingprocess.ToassistED,practitionersarerequiredtoprepareaseparatescheduleforeachFFELProgramcompliancerequirementtestedduringtheirengagement.Forexample,&&&-2`-EDForms799,IndividualRecordReview,LoanOriginationFeesetc.&&&-2`-ԀTheScheduleofFindingsandQuestionedAmountsmustincludetheinformationoutlinedbelow,whereapplicable.GovernmentAuditingStandardsstatesthatwelldevelopedfindingsgenerallyconsistofthefollowingattributes:1.0..Statementofcondition󀄀thenatureofthedeficiencies,forexample,aregulationnotbeingfollowed.2.0..Criteria󀄀whattheentityshouldbedoing,forexample,thespecificregulation,aprudentmanagementpractice,oraninternalcontrolprocedure.3.0..Effect󀄀whathappenedasaresultofthecondition;thisshouldbequantifiedintermsofdollarvalueinallpossibleinstancesanddescribedasthoroughlyaspossible.4.0..Cause󀄀whytheconditionexists,forexample,theentitywasunawareoftheregulationorinternalcontrolwasnotahighpriorityoftheentity.5.0..Recommendation󀄀whattheentityshoulddotocorrectthecondition;normallyaddressesthecause,e.g.,developprocedurestoimplementregulationorspecificactionstofollowestablishedprocedures.Ifcorrectiveactionisnotnecessary,thepractitionermustdescribethereason.Thepractitionermustattempttoidentifythecondition,criteria,effect,andcausetoprovidesufficientinformationtoEDofficialstopermittimelyandproperauditresolution.ThesefindingsmayalsoserveasabasisforEDtoconductfurtherwork.&&&-2*0-Inaddition,findingsidentifiedinallservicerandagreeduponproceduresengagementsshouldclearlybeidentifiedorclassifiedasmaterialorimmaterial.&&&-2`-Indescribingtheconditionandeffect,thepractitionermustprovide,ifapplicable,thefollowing:1.0..AllXXX-\ `-LenderIDsthatcomprisethepopulationfromwhichthesamplewasselected.&&&-2`-2.0..Samplingmethodology3.0..Thenumberofunitsanddollarvalueofthepopulation.4.0..Thenumberofunitsanddollarvalueoftheselectedsample.5.0..Thenumberofunitsanddollarvalueoftheinstancesofnoncompliance...&&&-2*0-6.0..Thepopulationofapplicabletransactionsadministeredbytheservicerforeachlenderinthepopulation(pertainstoagreeduponproceduresengagements).&&&-2`-XXX-\ `-&&&-2*0-&&&-2`-T$..  APPENDIXB T$..P  EXAMPLE5 @..D ILLUSTRATIVE  @..  REPORTONAGREEDUPONPROCEDURES@..ATTESTATIONENGAGEMENTUNDERALTERNATIVEMETHOD    ׈  @..@IndependentAccountantsReport[Addressee]WehaveperformedtheproceduresincludedinSectionIIIofthe1996AuditGuide,&&&-\ `-ComplianceAuditsforLendersandLenderServicersParticipatingintheFederalFamilyEducationLoan(FFEL)Program&&&-2`-(theGuide),issuedbytheU.S.DepartmentofEducation,OfficeofInspectorGeneral,whichwereagreedtobythe[ABCLender]andU.S.DepartmentofEducationsolelytoassisttheusersinevaluatingmanagementsassertionsincludedinitsrepresentationletterdated[date],whicharepresented[below/intheaccompanyingsummarytothisreport],relativetocompliancewithcertainU.S.DepartmentofEducationreportingrequirementsapplicabletothe[ABCLenders]participationintheFederalFamilyEducationLoanProgramduringtheyearended[date].Thisagreeduponproceduresengagementwasperformedinaccordancewith&&&-2*0-GovernmentAuditingStandards,issuedbytheComptrollerGeneraloftheUnitedStatesandstandardsestablishedbytheAmericanInstituteofCertifiedPublicAccountants.&&&-2`-ԀThesufficiencyoftheseproceduresissolelytheresponsibilityofthespecifiedusersofthereport.Consequently,wemakenorepresentationregardingthesufficiencyoftheproceduresdescribedintheGuideeitherforthepurposeforwhichthisreporthasbeenrequestedorforanyotherpurpose.@..b [Includeparagraphtoenumerateproceduresandfindings.]Theseagreeduponproceduresaresubstantiallylessinscopethananexamination,theobjectiveofwhichistheexpressionofanopiniononwhethermanagementsassertionsarefairlypresented.Accordingly,wedonotexpresssuchanopinion.Hadweperformedadditionalprocedures,othermattersmighthavecometoourattentionthatwouldhavebeenreportedtoyou.Thisreportisintendedsolelyfortheinformationoftheauditcommittee,management,andtheU.S.DepartmentofEducation,andshouldnotbeusedbythosewhodidnotparticipateindeterminingtheprocedures.However,thisreportisamatterofpublicrecordanditsdistributionisnotlimited.&&&-2*0-[Signature]4..4..h..h....[Date]&&&-2`-T$..  APPENDIXBT$..P EXAMPLE6 @..b   ILLUSTRATIVEPRACTITIONER'SCOMMENTSON@..D PRIORYEARSAUDIT/EXAMINATIONRESOLUTIONMATTERS@.. RELATINGTOTHEFFELPROGRAM  Thelender[servicer]hasnottakencorrectiveactiononfindingsfromprioraudits/examinations:..FindingNo.1:0..0h..hInanaudit[examination]performedbythe[IdentifyEntity,forexample,ED/OIGorHIJAuditFirm]dated[m/d/y]andtitled[nameofaudit/examination],infiftyof200loansreviewed,thelenderbilledtheU.S.DepartmentofEducationforinterestaftertheloansweresold.TheDepartmentwasoverbilledby$125,000...Status:0..04..40..0h..hAsof[m/d/y],thelenderhasnotmadearefundtotheU.S.DepartmentofEducationoranadjustmenttotheEDForm799.T$..  APPENDIXBT$..P EXAMPLE7 @..F ILLUSTRATIVE @..   CORRECTIVEACTIONPLAN    ..4..4` ..` ..h..h (PreparedbyLenderorServicerManagement)   TheCorrectiveActionPlan(CAP)istobepreparedbythelenderorserviceronthelender'sorservicersletterhead,asapplicable.ThefollowingisasuggestedformattoassistthelenderorservicerinthepreparationoftheCAP:* d,x +  ++ NameofLenderorServicer: +|q+ OfficialWhoPreparedPlan: +|q+ PhoneNumber: +|q+ AuditPeriod: '|' Practitioner/Firm: a.0..CommentsonFindingsandRecommendations0..Thelenderorservicer,asapplicableshouldprovideastatementofconcurrenceornonconcurrencewitheachfindingandrecommendation.Ifthelenderorservicer,asapplicabledoesnotagreewithafinding,specificinformation/documentationshouldbeprovidedbythelenderorservicer,asapplicabletosupportitsposition.Ifthedocumentationisvoluminous,anappendixmaybeattachedtothesubmission.b.0..ActionsTakenorPlanned0..Thelenderorservicer,asapplicableshoulddetailactionstakenorplannedtocorrectdeficienciesidentifiedintheauditreport.Toexpeditetheresolutionprocess,appropriatedocumentationmustbesubmittedforactionstaken,whenrequested.Forplannedactions,lendersorservicers,asapplicablemustprovideprojecteddatesforcompletionofmajortasks.Officialsresponsibleforcompletingtheproposedactionsshouldbeidentified.Ifthelenderorservicer,asapplicablebelievesacorrectiveactionisnotrequired,astatementdescribingthereasonsshouldbeincluded.c.0..StatusofCorrectiveActionsonPriorFindings0..Forallaudits,programreviewsandguarantyagencyreviewsfortheprevioustwoyears,thelenderorservicer,asapplicablemustcommentonallpriorfindingsandwhethercorrectiveactionhasbeencompleted.Thelenderorservicer,asapplicableshouldprovideareportonthestatusofcorrectiveactionstakenonpriorfindingsthatremainopen.Anupdateshouldbeincludedondatesforcompletionofmajortasksandresponsibleofficialsforanyactionsnotcompleted.  X  , |(X4hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[  T$..   APPENDIXC    Page1of2   XXX-2`--2`-  DEFINITIONSXXX-2`- T$..T$&&&-2`-    XXX-2`-LENDER &&&-2`-&&&-)`-Theterm"eligiblelender"isdefinedinsection435(d)oftheHigherEducationActof1965,asamended,asfollows:(d)ELIGIBLELENDER.0..(1)INGENERAL....,theterm"eligiblelender"means0..0..(A)aNationalorStatecharteredbank,amutualsavingsbank,asavingsandloanassociation,astocksavingsbank,oracreditunionwhich0..0..0..(I)issubjecttoexaminationandsupervisionbyanagencyoftheUnitedStatesoroftheStateinwhichitsprincipalplaceofoperationisestablished,and0..0..0..(ii)doesnothaveasitsprimaryconsumercreditfunctionthemakingorholdingofloansmadetostudentsunderthispartunless(I)itisabankwhichiswhollyownedbyaState,orabankwhichissubjecttoexaminationandsupervisionbyanagencyoftheUnitedStates,makesstudentloansasatrusteepursuanttoanexpresstrust,operatedasalenderunderthispartpriortoJanuary1,1975,andwhichmeetstherequirementsofthisprovisionpriortotheenactmentoftheHigherEducationAmendmentsof1992,or(II)itisasinglewhollyownedsubsidiaryofabankholdingcompanywhichdoesnothaveasitsprimaryconsumercreditfunctionthemakingorholdingofloansmadetostudentsunderthispart;0..0..(B)apensionfundasdefinedintheEmployeeRetirementIncomeSecurityAct;0..0..(C)aninsurancecompanywhichissubjecttoexaminationandsupervisionbyanagencyoftheUnitedStatesoraState;0..0..(D)inanyState,asingleagencyoftheStateorasinglenonprofitprivateagencydesignatedbytheState;0..0..(E)aneligibleinstitutionwhichmeetstherequirementsofparagraphs(2)through(5)ofthissubsection;0..0..(F)forpurposesonlyofpurchasingandholdingloansmadebyotherlendersunderthispart,theStudentLoanMarketingAssociationoranagencyofanyStatefunctioningasasecondarymarket;0..0..(G)forpurposesofmakingloansundersections428A(d),428B(d),428C,and439(q),theStudentLoanMarketingAssociation;0..0..(H)forpurposesofmakingloansundersection428(h)and428(j),aguarantyagency;0..0..(I)aRuralRehabilitationCorporation,oritssuccessoragency,whichhasreceivedFederalfundsunderPublicLaw499,EightyfirstCongress[64Stat.98(1950)];and0..0..(J)forpurposeofmakingloansundersection428C,anynonprofitprivateagencyfunctioninginanyStateasasecondarymarket. &&&-2`-  APPENDIXCPage1of2  &&&-)`-SERVICER XXX-2*0-Theterm"thirdpartyservicer"isdefinedinsection682.200subpartBGeneralProvisionsofthe34CFR,asfollows:XXX-*`-ThirdPartyservicer.AnyStateorprivate,profitornonprofitorganizationoranyindividualthatentersintoacontractwithalenderorguarantyagencytoadminister,througheithermanualorautomatedprocessing,anyaspectofthelendersorguarantyagency'sFFELProgramsrequiredbyanystatutoryprovisionoforapplicabletoTitleIVoftheHEA,anyregulatoryprovisionprescribedunderthatstatutoryauthority,oranyapplicablespecialarrangement,agreement,orlimitationenteredintoundertheauthorityofstatutesapplicabletoTitleIVoftheHEAthatgovernstheFFELProgram,includinganyapplicablefunctiondescribedinthedefinitionofthirdpartyservicerin34CFRSection668;originating,guaranteeing,monitoring,processing,servicing,orcollectingloans;claimssubmission;orbillingforinterestandspecialallowance. NONSUBSIDIZEDSTAFFORDLOAN AStaffordloanmadepriortoOctober1,1992thatdoesnotqualifyforinterestbenefitsunder34CFR682.301(b)orspecialallowancepaymentsunder34CFR682.302. UNSUBSIDIZEDSTAFFORDLOAN AloanmadeafterOctober1,1992authorizedundersection428HoftheActforborrowerswhodonotqualifyforinterestbenefitsunder34CFR682.301(b).  XXX-2*0-     XXX-*`-  T$..T$ APPENDIXD  T$..T$    @..LENDERPAYHISTORYSEARCHINSTRUCTIONS    LenderPayHistorySearches,alsoknownasLenderSearchReports,areavailablefromtheDepartmentofEducation'scontractor,ESystems,Inc.TheLenderPayHistorySearch,orLenderSearchReport,isaquarterlyreportwhichshowstheinterestbenefits,specialallowancesandoriginationfeesreportedbythelenderontheEDForm799.ThereportalsoshowsthedetailedinformationreportedbythelenderontheEDForm799regardinginterestbenefits,specialallowancesandoriginationfees.InstructionsforobtainingtheLenderPayHistorySearcheswerecontainedinGSL/PerkinsBulletin93031,dated62593,whichisreproducedbelow.T$..!62593@..-*`-GSL/PerkinsBulletin@..-)`-(93031)-*`-NOTICE!-*`-LenderPayHistorySearches...XXX-*`-GuarantyAgenciesandauditorsshouldsubmitrequests,inwriting,for799InterestPaymentLenderPayHistorySearchestothefollowingaddress:0..0..0..U.S.DepartmentofEducation......InterestPaymentProcessing......P.O.Box4134......Greenville,Texas754034134Therequestmustincludethelender'sname,sixdigitlenderIDnumberandwherethePayHistorySearchistobemailed.Therequestshouldincludewhichyearandquarterendingisrequired.Ifallyearsareneeded,therequestshouldindicateassuch.Ifyouhaveanyquestions,pleasecall(903)4084500.Thanksforyourcooperation.CustomerServiceCenterESystems,Inc.GreenvilleDivision18004357709        APPENDIXE  Page1of2 &&&-2*0-   HIGHRISKINDICATORS    Thefollowinglistidentifiessomehighriskindicatorsand/orconditionsthatthepractitionermayencounterwhiletestingthevariouscomplianceareasinthelenderorserviceraudits.Ifthepractitionershouldbecomeawareofillegalactsorindicationsofsuchacts,theIPAshouldfollowguidancecontainedinSection1oftheGuide.(Note:Thefollowinglistisbeingprovidedforinformationpurposes.Thepractitionerisnotrequiredtoperformtestproceduresforeachofhighriskindicatorsand/orconditionsthatfollow.) Conditionswhichmayimpactoriginationfees 1.0..Originationfeesnotsubmittedortransmitted.2.0..Saleortransferofloanswithinthequarterinwhichtheloanisdisbursed.Theoriginatinglenderdidnotpayfees.3.0..Lackofdocumentationtoverifyamountsdisbursedoractualdatesofdisbursements. Conditionswhichmayimpactinterestbenefitsandspecialallowance 1.0..Disbursementchecksnotcashed.2.0..Errorsincalculatingaveragedailyprincipalbalancesforinterestandspecialallowance.3.0..Borrowerswhoreceivedloansnoteligibleforinterestbenefitsareincludedinthebilling.4.0..Undisbursedportionsofmultipledisbursedloansareincludedinthebalancesforinterestandspecialallowancecomputations.5.0..Disbursementsinexcessofloanamountsguaranteedincludedinbilling.6.0..Soldloansnotremovedfromthebalancesforbillinginterestandspecialallowanceeffectiveonthedatesaleproceedswerereceived.7.0..Improperlyappliedprepayments.8.0..BillingforinterestonaStaffordloanwhenborrowersceasetobeeligibleforanauthorizeddeferment.9.0..Failuretoconvertloanstorepaymentorlateconversiontorepayment.10.0..Staffordloanchecksdisburseddirectlytotheborrowerinsteadoftheschool(exception:borrowersattendingforeignschools).11.0..Disbursementoffundspriortoissuanceofaguaranteefortheloan.12.0..Loansindefermentnotincludedforinterestbenefits.13.0..Conversionofloanstorepaymentpriortotheendoftheborrower'sgraceperiodorpostdefermentgraceperiod(exception:borrowerrequestsinwritingthathisorhergraceperiodbeterminatedearly).14.0..Borrowersinforbearancestatusincludedinthebillings.15.0..Insufficientdocumentationonfiletosubstantiatedefermenteligibility.16.0..Inabilitytosubstantiaterighttointerestandspecialallowancebecauseofafailuretocomplywithrecordretentionrequirements.17.0..Useofincorrectinterestrates.18.0..Doublebilling.ReportingfullbalanceofloanportfoliointwoCategories.19.0..Billingforspecialallowanceondenied/rejectedclaimsduetotimelyfilingviolations/duediligenceviolations.20.0..Loansinrepaymentnotincludedinbilling.21.0..Largenumberofadjustmentstointerestandspecialallowancebillings(e.g.,overbillonequarterlyperiodandoffsetagainstthenextquarterlyperiodwhileearninginterestonthefunds).22...LendersfailuretodelaybillingforinterestonfirstdisbursementsofStaffordloans.  XXX-*`- APPENDIXEPage2of2 &&&-2*0-Լ  General 1.0..IneffectivecontrolsovertheintegrityofthesoftwareprogramandaccesstoFFELProgramdata.2.0..Inadequatecontrolsoverthevalidity,accuracy,andcompletenessofprocesseddata.3.0..Inadequatedocumentation.4.0..InadequateornowrittenpoliciesandproceduresforadministeringfunctionsrelatedtotheFFELProgram.5.0..Lackofsegregationofduties.6.0..Largefluctuationsintheportfoliolevelsofthelenderasreportedintheirinterestandspecialallowancebillings.7.0..BillingundermorethanonelenderI.D.(i.e.,havingmorethanoneaccountandbillingforthesameportfoliounderbothI.D.'s).8.0..Lendercomputersystemdesignedtoupdateincreasestoportfoliobalancesastheyoccur,butdoesnotupdatedecreasestoportfoliobalancesinatimelymanner;thus,thelendercollectsmoreinterestandspecialallowance.9.0..Complaintsreceivedfromtheguarantyagencyregardingalenderindicatepotentialfraud.10.0..Socialsecuritynumberseitherduplicateorerroneous.11.0..Largenumberoftypedloanapplicationsonfilewithsamecharacteristics.12.0..Lenderwithhighnumberof"neverenrolled"students.13.0..Keymanagementturnover.14.0..Highdefaultrates.15.0..Pooraccountingrecords.16.0..NumerousstudentcomplaintsfiledwithBetterBusinessBureauandStateagencies.17.0..Presenceofattorneyatentranceconferenceandothermeetings.18.0..Officials/attorneys/consultantsrestrictaccessofinformationtoauditorsanddemandtositinwithauditstaffduringfieldwork.19.0..Keystaffareconvictedfelons.20.0..Delinquentauditreports,reportsneversubmittedtoED.21.0..OSFAprogramreviewsindicatenumerousprogramviolations.XXX-*`- DueDiligenceRedFlags 1.0..Numberoftelephonecontactentriesonaspecificdayexceedthenumberoftelephonecalls.2.0..Entriesfortelephonecontactsaresignificantlyhigheronaspecificday.3.0..Computerizedtelephoneorautodialersystemsexperiencenonfunctionalperiods,yettelephonecontactentriesaredocumented.        & ,       -*`-  * d,0 +  ))  NOTIFICATIONTOSUBMITTERSOFCONFIDENTIALCOMMERCIALINFORMATION  ԿXXX-2`- X |(X4` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[XXX-*`- X   ..&&&-2*0-YouhavebeenormaybeaskedtosubmittotheOfficeofInspectorGeneral(OIG),U.S.DepartmentofEducation,informationinconnectionwithaninvestigation,audit,inspectionorotherinquirypursuanttotheInspectorGeneralActof1978,asamended,5U.S.C.app.3,sec.1etseq.Thisistonotifyyouthatifyoudeemanyofthisinformationtobe confidentialcommercialinformation,youmaytakestepstosodesignatethatinformationtoprotectitsconfidentialityifatafuturepointintimearequestismadefordisclosureofthisinformationundertheFreedomofInformationAct(FOIA)... ConfidentialcommercialinformationmeansrecordsthatmaycontainmaterialexemptfromreleaseunderExemption4oftheFOIA(pertainingtotradesecretsandcommercialorfinancialinformationthatisprivilegedorconfidential),becausedisclosurecouldreasonablybeexpectedtocausesubstantialcompetitiveharm...YoumayuseanyreasonablemethodyoubelieveappropriateandwhichisacceptabletotheOIGtoindicatewhichdocumentsandinformationyoudeemtofallintothecategoryof confidentialcommercialinformation.Pleasebeasspecificaspossibleinsegregatingtheinformationthatyouconsidertobe confidentialcommercialinformationfromanyotherinformationyouareprovidingtotheOIG.ThismaybedonebeforesuchinformationisprovidedtotheOIGiffeasible,butonlyifitwillnotdelayorinterferewithproductionoftheinformationordelayorinterferewiththeOIG'sinvestigation,audit,inspectionorotherinquiry.Otherwise,youmaysodesignatethisinformationwithinareasonableperiodoftimeaftertheinformationisprovidedtotheOIG...IfanFOIArequestisreceivedbytheOIGforinformationyouhavedesignatedas confidentialcommercialinformation,theOIGisneverthelessrequiredbylawtomakeitsownindependentdeterminationofwhethertheFOIArequiresdisclosureoftheinformationorwhetheritshouldbewithheldpursuanttoExemption(b)(4)oranyotherexemptionoftheFOIA.IftheOIGdeterminesthatitmayberequiredtodisclosepursuanttotheFOIAthatinformationyouhavedesignatedorotherinformationthattheOIGhasreasontobelievecouldreasonablybeexpectedtocausesubstantialcompetitiveharm,totheextentpermittedbylaw,wewillmakeagoodfaithefforttonotifyyouandprovideyouwithareasonableopportunitytoobjecttosuchdisclosureandtostateallgroundsuponwhichyouopposedisclosure.Wewillgivecarefulconsiderationtoallspecifiedgroundsfornondisclosurepriortomakingourfinaldecision...Ifwenonethelessbelievethatdisclosureisrequired,wewillprovideyouwithastatementexplainingwhyyourobjectionswerenotsustainedandspecifyingadisclosuredate.Totheextentpermittedbylaw,thisstatementwillbeprovidedtoyouinareasonablenumberofdayspriortothespecifieddisclosuredate.Furthermore,ifdisclosureofthedesignatedinformationisdeniedpursuanttoanexemptionundertheFOIAandanadministrativeorjudicialappealistakenbytheFOIArequester,wewillmakeagoodfaithefforttonotifyyoupromptly...TheproceduresoutlinedinthisnoticeareintendedonlytoimprovetheinternalmanagementoftheOIGandarenotintendedtocreateanyrightorbenefit,substantiveorprocedural,enforceableatlawbyapartyagainsttheUnitedStates,itsagencies,itsofficers,oranyperson.XXX-*`-