10 Aug Gaining Control of Compliance in Higher Ed: Tips for Implementing a Comprehensive Compliance Program
Submitted By Peter Terebesi, President and Founder, Higher Ed Executives
A comprehensive compliance program fosters a culture of ethics and compliance. It helps an institution maintain its fiduciary, federal financial reporting, internal control, and legal and regulatory responsibilities. In doing so, institutions gain an understanding of the nature of risks and potential exposures they face, putting them in control. As a result, they’re able to manage their risks and thus, have fewer compliance problems.
To have an effective compliance program, an institution must establish and maintain a culture that encourages ethical conduct and a commitment to compliance with the law, backed by best practices for internal controls and a well-trained administration.
For many it sounds like a daunting task, but it won’t be with these helpful tips.
Establish a culture of compliance
In Higher Education, it’s not enough to have the appearance of compliance. Rather, compliance must be inseparable from the institution’s processes and embedded in its structure. The overall culture within the campus administration can serve to foster and enhance compliance efforts, or, at its worst, impede or render compliance efforts meaningless. Since the latter isn’t an option it’s important to support conversations and initiatives that advance your institution’s compliance goals. Be you President, Chancellor, Dean or Director, your leadership sets the tone and impacts its culture. Are you setting the tone for compliance?
Formalize oversight and reporting responsibilities
It’s vital to formally assign oversight and reporting responsibilities to appropriate management. At large universities, oversight is often the responsibility of an internal audit committee appointed by its board of directors. The committee chair is often a senior level official such as Chief Compliance Officer or Chief Financial Officer that reports to the board and has responsibility for ensuring the committee meets the strategic mission and goals of the intuition. At smaller schools and colleges, it may be the college president or the school owner themselves.
This person is the champion of the cause; ever promoting compliance and is responsible for ensuring that adequate staff, training and systems are in place and reporting to the school’s board. Maybe that person is you.
Keep Written Policies and Procedures Up To Date
Written policies are essential for maintaining compliance. Well written policies provide structure for rules and guidelines and describe key internal control activities.
Colleges getting Title IV aid, must have documented and up to date written policies describing activities for packaging, awarding and disbursing federal student aid. It’s required by federal law. I can’t tell you how many schools I’ve seen that haven’t kept their policies up to date with current regulations. It’s frightening to think that some don’t have written policies at all. Institutions with written policies simply have fewer compliance failures than those that don’t.
Remember, policies aren’t the same thing as procedures and both are extremely important. No policy is complete without an accompanying written procedure. Procedures tell us how to perform an operation and help everyone consistently follow best practices. The benefits of written procedures are numerous. For example, the right procedures can actually improve business processes and can aid in interdepartmental communication. Written procedures help new employees learn how your college performs essential day-to-day tasks. Surprisingly, this is one of the more common missing or neglected elements of compliance at colleges.
If you want empowered, engaged employees, nothing pays bigger returns than investing in training. From new hire orientation, to professional development, employees love to learn how to do their jobs well. Integrate compliance into these types of training sessions to share and reinforce best practices, and to engage the campus administration in problem solving.
Establish Lines of Communication
Communication between departments is essential when establishing a compliance program as well as for its ongoing integrity. With campuses often spread out in multiple buildings or over multiple floors, and managers with competing to-do lists communicating can be a challenge. Regularly scheduled meetings are great, and additional, regular check-ins can help you identify importation issues sooner. Sometimes simply asking about variations in reports or anomalies in forecasts can alert you to potential problems. Speaking of Reports- they can be a great tool for monitoring internal control.
Monitor Internal Controls
Strong internal controls can tell us a lot about the effectiveness and efficiency of operations, the reliability of reporting, and compliance with applicable rules, laws and regulations. Monitoring ensures that internal controls are operating effectively and it can be done easily because a comprehensive program will have high quality, effective monitors built in. For example, using reports to monitor things like cash flow or verification are effective monitors. Gathering feedback from students, alumni and donors can alert you to issues you might not have seen coming. Requiring approvals for disbursing award funds, or keeping records of internal monthly reconciliation work doesn’t require any more effort from anyone and takes reasonable steps to ensure that the compliance program is followed.
Respond to Issues Promptly and Enforce Standards
Day-to-day enforcement is easier with strong procedures and monitors. Simply making time to review reports and incorporating them into your meetings and conversations will provide plenty of opportunity to do so. And plenty of insight.
Colleges big and small should have written disciplinary guidelines that enforce compliance standards. This sends the message that compliance is a shared responsibility as well as an expected and required element of employment. It also signals that violation of compliance policy results in punitive measures. Don’t be afraid to enforce disciplinary guidelines. Protecting the reputation of your college is essential in this day and age of bad actors, regulatory scrutiny and consumer protection.
Staff should know that it’s important to bring instances of non-compliance and compliance violations forward as soon as they are discovered so that corrective actions can be applied. Nearly all of the time, effective managers resolve day-to-day issues by providing training and support, providing remedies for issues on the fly. It’s necessary to escalate complex or systemic issues to senior management or the board. In cases of fraud or theft, disciplinary actions should be taken. Schools can even contact the Office of the Inspector General to refer suspected cases of fraud.
Conduct Periodic Risk Assessments
Too many schools don’t take the time to assess their compliance. Some schools feel they are too small to worry about it, while others feel overwhelmed by the number of rules and regulations to comply with or are “just too busy”. How often do we say – If we only had the ability to see into the future – Periodic reviews do just that. They are one of the best ways to maintain compliance because reviews provide insight into an institutions risk and improvements can always be made.
Institutions often retain consultants to provide periodic reviews. Our firm for instance conducts annual “mock program reviews” a type of compliance assessment for our clients. It gives out clients a heads up on errors contained in policies, procedures, consumer information, and student files. It’s a great way to tune up before an audit and our clients experience fewer audit findings as a result.
This article first appeared on the Higher Ed Executives Blog.