F A Montana Guaranteed Student Loan Program

A RepoRt

to the

MontAnA L e g i s L At u R e

FinAnciAL Audit

Montana Guaranteed Student Loan Program

For the Two Fiscal Years Ended June 30, 2017

d eceMbeR 2 017

LegisLAtive Audit division

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LEGISLATIVE AUDIT COMMITTEE

REPRESENTATIVES

Kim Abbott

Rep.Kim.Abbott@

Dan Bartel

Danbartel2@

Randy Brodehl

Randybrodehl57@

Tom Burnett, Vice Chair

Burnett.tom@

Virginia Court

virginacourt@

Denise Hayman

Rep.Denise.Hayman@

SENATORS

Dee Brown

senatordee@

Terry Gauthier

Mrmac570@

Bob Keenan

Sen.Bob.Keenan@

Margaret MacDonald

Sen.Margie.MacDonald@

Mary McNally, Chair

McNally4MTLeg@

Gene Vuckovich

Sen.Gene.Vuckovich@

FINANCIAL AUDITS

Financial audits are conducted by the Legislative Audit Division to determine if the financial statements included in this report are presented fairly and the agency has complied with laws and regulations having a direct and material effect on the financial statements. In performing the audit work, the audit staff uses standards set forth by the American Institute of Certified Public Accountants and the United States Government Accountability Office. Financial audit staff members hold degrees with an emphasis in accounting. Most staff members hold Certified Public Accountant (CPA) certificates.

The Single Audit Act Amendments of 1996 and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards require the auditor to issue certain financial, internal control, and compliance reports in addition to those reports required by Government Auditing Standards. This individual agency audit report is not intended to comply with these reporting requirements. The Legislative Audit Division issues a statewide biennial Single Audit Report which complies with the above reporting requirements. The Single Audit Report for the two fiscal years ended June 30, 2015, was issued March 29, 2016. The Single Audit Report for the two fiscal years ended June 30, 2017, will be issued by March 31, 2018.

Members serve until a member's legislative term of office ends or until a

successor is appointed, whichever occurs first.

?5-13-202(2), MCA

AUDIT STAFF

Jeane Carstensen-Garrett Mary Currin Jennifer Erdahl

Fraud Hotline (Statewide)

1-800-222-4446

(in Helena) 444-4446

ladhotline@

Reports can be found in electronic format at:

LEGISLATIVE AUDIT DIVISION

Angus Maciver, Legislative Auditor Deborah F. Butler, Legal Counsel

Deputy Legislative Auditors Cindy Jorgenson Joe Murray

December 2017

The Legislative Audit Committee of the Montana State Legislature:

This is our report on the Office of the Commissioner of Higher Education's Montana Guaranteed Student Loan Program for the two fiscal years ended June 30, 2017.

The Office of the Commissioner of Higher Education prepares the program financial statements and related notes to the financial statements for the Montana Guaranteed Student Loan Program. The financial statements and related notes are located on pages A-3 through A-16.

As part of our audit, we reviewed the program's operations and compliance with selected federal regulations. Our audit resulted in an unmodified opinion, and the report does not include any recommendations to the office.

We thank the Commissioner of Higher Education and his staff for their assistance and cooperation throughout the audit.

Respectfully submitted,

/s/ Angus Maciver Angus Maciver Legislative Auditor

Room 160 ? State Capitol Building ? PO Box 201705 ? Helena, MT ? 59620-1705 Phone (406) 444-3122 ? FAX (406) 444-9784 ? E-Mail lad@

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Table of Contents

Figures and Tables.....................................................................................................................ii Appointed and Administrative Officials ..................................................................................iii Report Summary ...................................................................................................................S-1 CHAPTER I ? INTRODUCTION1 Introduction ..............................................................................................................................1 Background ...............................................................................................................................1 INDEPENDENT AUDITOR'S REPORT AND PROGRAM FINANCIAL STATEMENTS Independent Auditor's Report ............................................................................................... A-1 Federal Special Revenue Fund Balance Sheet as of June 30, 2017......................................... A-3 Federal Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual for the Fiscal Year Ended June 30, 2017....................................A-4 Federal Special Revenue Fund Balance Sheet as of June 30, 2016......................................... A-5 Federal Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual for the Fiscal Year Ended June 30, 2016 ...................................A-6 Federal Special Revenue Fund Notes to the Financial Statements for the Fiscal Years Ended June 30, 2016, and June 30, 2017 ......................................................................................... A-7 REPORT ON INTERNAL CONTROL AND COMPLIANCE Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................................................................ B-1 PROGRAM RESPONSE Montana Guaranteed Student Loan Program ......................................................................C-1

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