SUPPLEMENT NO. 11

DIII Presidents Council 11/01

RELATED TO
MANAGEMENT COUNCIL
SUPPLEMENT NO. 11

DIVISION III FINANCIAL AID AND AWARDS COMMITTEE

Summary of Recommendations

PRESIDENTS COUNCIL ACTION ITEM

1.	ISSUE:	Revisions to Proposal No. 2-51 – Financial Aid – Audit Process.
Committee’s Recommendation:
	The committee recommends the following amendments to the proposed financial aid audit requirements and procedures. a. Audit scope—Freshmen and Transfer Students -- Narrow the student-athlete population to include only full-time, first-time freshmen and incoming, full-time transfer student-athletes, as opposed to the entire student-athlete population. b. Audit size—At Least 40 -- Require schools to audit the files of at least 40 freshmen and transfer student-athletes and a corresponding number of nonstudent-athlete freshmen and full-time transfer students, selected at random through a method to be identified by the committee. Schools with fewer than 40 freshmen and transfer student-athletes should audit all freshmen and transfer student-athlete files, with a corresponding number of nonstudent-athlete files selected at random. c. Internal Auditor -- Permit institutions to use an internal auditor, provided the individual is not associated with the athletics staff. d. Audit Deadline -- Establish an annual deadline of November 15. e. Committee Review When Student-Athlete Need Met Varies by 10 Percent or More From Nonstudent-Athletes -- Require institutions to submit for committee review any audit results indicating that the percent of average need met with institutional gift aid for student-athletes in a financial need category exceeds by 10 percent or more the percentage of nonstudent-athlete need met in the same category. The institutional submission may include information detailing mitigating factors that support and explain the difference. Institutions also shall submit similar information to the committee when the percent of student-athlete need met in any one need category exceeds 100 percent. Following committee review, a variance not explained to the committee’s satisfaction shall be forwarded to the enforcement staff as an apparent violation of Bylaw 15, and will be handled pursuant to the Association’s infractions process. f. Annual Committee Review of Randomly Selected Audits -- The committee intends to review annually a random number of institutional audits, above and beyond the audits it will review because of percentage variances between student-athletes and nonstudent-athletes. g. Retention of Audit Results -- Require institutional audit results to remain on file in the institution’s financial aid office available for at least four years (three prior years plus the current year). h. Implementation Timetable -- Endorse the revised timetable related to the implementation of proposal No. 2-51, as amended.
Management Council Recommendation:
	a. Withdraw Proposal No. 2-51 and refer the issue back to the Financial Aid and Awards Committee. b. Continue to pursue the development of a financial aid audit process and consider: (1) Audit Scope and Size. ? Include, on a sport-by-sport basis, full-time, first-time freshman and incoming transfer student-athletes compared to all nonstudent-athlete full-time, first-time freshman and transfer students (e.g., 1/3 of institutions’ sports teams each year). (2) Auditor and Frequency. ? Audit activities should occur annually. ? Require regular external audit periodically (e.g., once every three years). ? Require internal audit during all other years. (3) Possible Timetable. 2002-03 -- Develop and refine financial aid audit process and procedures. -- Adopt proposed legislation. 2003-04 -- Design methodology with assistance from consultants. 2004-05 -- All Division III institutions engage in external audits. 2005-06 -- All Division III institutions engage in internal audits. 2006-07 -- Random selection of 1/3 of Division III member institutions for annual external audit and establish three-year rotation for external audits.

INFORMATIONAL ITEMS

1.	ISSUE:	Pilot audit participation.
Committee’s Action:
	The committee originally selected 20 institutions to participate in the audit. Nineteen of those institutions ultimately were able to participate. Sixteen participants were able to forward pilot results by the October 15 deadline.
Management Council Action:
	Accepted the information, commending the pilot institutions for their assistance and the members of the Financial Aid and Awards Committee for their work.
2.	ISSUE:	Educational efforts.
Committee’s Action:
	Committee representative presented the audit model at the following meetings: January ……...NCAA National Convention April…………3 NCAA Regional Rules Seminars May………….EASFAA (Eastern Association of Student Financial Aid Administrators) June …………NACDA (National Assoc. of Collegiate Directors of Athletics) Division III Conference Commissioners Meeting July………….NASFAA (National Association of Student Financial Aid Administrators) The committee obtained valuable feedback regarding the audit model and procedures during these presentations. The feedback can be summarized into four themes: Cost Use of external auditors is not cost effective. Requiring review of too many files will increase cost. Frequency Requiring yearly audits through an external auditor too frequent and will overburden directors of financial aid. Results Concentrate review on freshman and transfers where abuses are more likely to occur. Further, the results should compare students of like groups (e.g. freshmen and transfers compared to other freshmen and transfers, as opposed to freshmen compared to upper classmen). More clearly define terms regarding financial awards to be included in the audit report. Enforcement More clearly define the review and enforcement process for schools when audit results suggest a rules violation may exist .
Management Council Action:
	Accepted the information.
2.	ISSUE:	Proposed Audit Model, Reporting Instructions and Sample Form.
Committee’s Action:
	The committee has revised the audit model, draft reporting instructions and sample reporting forms to reflect the proposed action items detailed above.
Management Council Action:
	Accepted the information.
3.	ISSUE:	Institutional Compliance Checklist.
Committee’s Action:
	If Proposal No. 2-51, as amended, is adopted, the committee intends to revise the Institutional Compliance Checklist previously approved by the Management Council to reflect changes made to the proposed audit model. The revised checklist will be incorporated into the Division III Institutional Self-Study Guide (ISSG).
Management Council Action:
	Accepted the information.

The National Collegiate Athletic Association

October 25, 2001 BB/DTD:skt