Montana guaranteed student loan program, Commissioner of Higher Education : performance audit report PDF
Preview Montana guaranteed student loan program, Commissioner of Higher Education : performance audit report
tana* II 353.88 of.f^iicseLaotfuritiie Ouaranteetl L72MGS i tudeiit Loan 1992 Pro .^rt.i;_r.nifone r o£ OflBce of the Legislative Auditor State of Montana Report to the Legislature Performance Audit Report June 1992 STATE DOCUMENTS COLLECTIOM SEP -- 1992 MONTANA STATE LIBRARY 1515MEO-N6TtAhNAAVE5.9520 HELENA, Montana Guaranteed Student Loan Program Commissioner of Higher Education This report contains recommendations for improving the manage- ment of the Montana Guaranteed Student Loan Program. The recommendations include: Strengthening management controls. Improving program review procedures. Formalizing computer system controls. -."^ frEiBisr~T- 1)1 itsuik fi Bsau Direct comments/inquiries to: Office of the Legislative Auditor Room 135, State Capitol Helena, Montana 59620 92P.36 3 0864 1002 4658 9 PERFORMANCE AUDITS Performance audits conducted by the Office of the Legislative Auditor are designed to assess state government operations. From the audit work, a determination is made as to whether agencies and programs are accomplishing their purposes, and whether they can do so with greater efficiency and economy. In performing the audit work, the audit staff uses audit standards set forth by the United States General Accounting Office. Members of the performance audit staff hold degrees in disciplines appropriate to the audit process. Areas of expertise include business and public administration, statistics, economics, computer science, communications, and engineering. Performance audits are performed at the request of the Legislative Audit Committee which is a bicameral and bipartisan standing committee ofthe Montana Legislature. The committee consists of four members of the Senate and four members of the House of Representatives. MEMBERS OF THE LEGISLATIVE AUDIT COMMITTEE Senator Greg Jergeson, Chairman RepresentativeJohnCobb, Vice Chairman Senator Tom Keating Representative Larry Grinde Senator Paul Svrcek Representative Mike Kadas Senator Gene Thayer Representative Robert Pavlovich STATE OF MONTANA ^ffitt xtf tite ^t^hintxixt ^ubiiax STATECAPITOL HELENA, MONTANA59620 406/444-3122 DEPUTYLEGISLATIVEAUDITORS: MARYBRYSON Operationsand EDPAudit LEGISLATIVEAUDITOR: JAMESGILLETT SCOTTA.SEACAT Financial-ComplianceAudit LEGALCOUNSEL: June 1992 JIM PELLEGRINI JOHNW. NORTHEY PerformanceAudit The Legislative Audit Committee of the Montana State Legislature: We conducted a performance audit of the Montana Guaranteed Student Loan Program of the Montana University System. This report contains recommendations concerning management controls and computer systems. A written response to this report from Montana Guaranteed Student Loan Program iscontained at the end ofthis report. We wish to express our appreciation to the Commissioner ofHigher Education and Montana Guaranteed Student Loan Program staff for their cooperation and assis- tance. Respectfully submi Scott A. Seacat Legislative Auditor Digitized by the Internet Archive in 2010 with funding from Montana State Library http://www.archive.org/details/montanaguarantee1992mont Office of the Legislative Auditor Performance Audit Montana Guaranteed Student Loan Program Commissioner of Higher Education Members of the audit staff involved in this audit were Pamela M. Boggs, Tom Cooper, Ken Erdahl, Angie Grove, Jim Nelson, and Jill Olson. Table of Contents List of Tables and Figures iv Apointed and Administrative Officials v Report Summary S-1 Chapter I Introduction 1 Introduction Audit Objectives 1 Audit Scope and Methodology 1 Compliance 3 Management Memorandums 3 Changes that Could Impact Future Reviews 4 Chapter II Background 5 Background Introduction 5 Program Description 5 Montana Program Organization 6 Montana Guaranteed Student Loan Program Organization 9 . . Acquiring the Loan 10 Process for Payment 12 When Borrower does not Make Payments 12 Chapter HI Introduction 15 Management Controls Controls are in Place 15 Goals and Objectives are Established 15 Communication is Effective 15 Management Information 16 Areas Where Controls Could be Strengthened 16 Updated Guidelines for Operational Procedures .... 16 Administrative Policies Should be Communicated ... 17 Performance Appraisals Need to be Completed 17 Page i Table of Contents Workload Levels for Claims Review Staff 18 Delegate Responsibility Over Various Sections 20 Summary 21 Chapter FV Introduction 23 Program Reviews Areas Where Procedures Meet Minimum Requirements .... 23 Adequacy of Other Program Procedures 24 Which Schools and Lenders are Reviewed 24 How Closed Schools are Accounted For 25 Sampling Procedures Could Be Improved 25 Quality Control Over Program Reviews 28 Summary 28 Chapter V Introduction 31 Computer System Outside of Helena Background 31 Internal Audit Function is in Place 33 An Adequate Disaster Recovery Plan Will be in Place 33 Service Agreement Could be Strengthened 33 Areas Where Controls Could be Improved 35 Staff Procedures Not Documented 35 Agency Management Controls Over Database Access 35 Changes Through Tape Override 36 Overall Improvements That Can be Made 37 Improvements Could be Made in Database Accuracy 38 Conclusion 39 Chapter VI Introduction 41 Computer Systems Maintained in Helena MHESAC Agreement Needs Clarification 42 Areas Where Controls Could be Improved 42 Disaster Recovery Plans 42 Recovery From Hardware Error 43 Page ii Table of Contents Is Electronic Information Secure? 44 Security Access to Computer Files 44 Segregation of Duties 45 Summary 45 Overall System Management 46 Agency Response Montana Guaranteed Student Loan Program 51 Page iii & List of Tables Figures Table Montana Guaranteed Student Loan Program Appropriations 1 Fiscal Years 1991-92 and 1992-93 10 Table 2 Projected Error Rates for MGSLP Program Reviews 26 Table 3 Evaluation of MGSLP Sample Sizes 27 Figure Annual Dollar Volume of Loans Guaranteed 1 Montana Guaranteed Student Loan Program 7 Figure 2 Cumulative Dollar Volume of Guaranteed Loans Montana Guaranteed Student Loan Program 8 Figure 3 Montana Guaranteed Student Loan Program Organization Chart 9 Figure 4 Student Loan Application Process 11 Figure 5 Comparison of Weekly Claims Per Reviewer Montana Guaranteed Student Loan Program 19 Figure 6 Total Claims Processed Per Reviewer Montana Guaranteed Student Loan Program 20 Figure 7 Information Flow Between Computer Systems 32 Page iv
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