Overview
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Massachusetts Educational Financing Authority (MEFA) for the period July 1, 2019 through December 31, 2020.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Below is a list of our audit objectives, indicating each question we intended our audit to answer and the conclusion we reached regarding each objective.
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Objective |
Conclusion |
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Yes |
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Yes |
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Yes |
To achieve our audit objectives, we gained an understanding of the internal control environment by reviewing MEFA’s internal control plans in effect during the audit period. To understand MEFA’s complaint management process, we reviewed MEFA’s servicing agreement with its loan servicer, PHEAA, as well as MEFA’s complaint management procedures. We also interviewed MEFA staff members who were knowledgeable about the complaint management process. To understand loan certifications, we tested application controls that were significant to the certification process, interviewed MEFA staff members who were involved with the process, and conducted a walkthrough of the process.
To determine whether MEFA processed CFPB complaints within 15 days as required by CFPB’s Company Portal Manual, we obtained from MEFA, and tested, all 23 complaints CFPB referred to MEFA during the audit period. We compared the date of receipt and date of resolution for each to determine whether the complaints were resolved within 15 days.
To determine whether MEFA ensured that all high-profile complaints were reported by PHEAA within three business days as required by Section 4.14 of the servicing agreement, we obtained from PHEAA, and tested, all five high-profile complaints reported by PHEAA to MEFA during the audit period. We compared the date each complaint was received by PHEAA to the date it was sent to MEFA.
To determine whether MEFA ensured that student loans disbursed were certified as required by Section 5(q) of Chapter 15C of the General Laws, we generated a random, statistical sample of 30 loans, with a 95% confidence level, 0% expected error rate, and 10% tolerable exception rate, from a complete list of 29,963 student loans with disbursements made during the audit period. We then obtained screenshots from MEFA’s loan certification portal for each loan in our sample and verified that each loan was certified by the student‘s educational institution before disbursement.
Data Reliability
We assessed the reliability of data related to loan disbursements, CFPB complaints, and high-profile complaints by performing electronic testing for duplicates, missing data, and data outside the audit period and interviewing MEFA officials who were knowledgeable about the data. In addition, we verified the completeness of high-profile and CFPB complaint data by tracing to source documents. We also verified completeness of loan disbursement data by sampling monthly disbursement totals from MEFA and reconciling the monthly totals to data from PHEAA to ensure that disbursement records matched. For data related to loan disbursements, CFPB complaints, and high-profile complaints, we reviewed information about the data and the systems that produced them or where the data were stored and tracked. We determined that the data were sufficiently reliable for the purposes of this report.
Conclusion
Our audit revealed no significant instances of noncompliance that must be reported under generally accepted government auditing standards.
| Date published: | April 14, 2022 |
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