Home Coronavirus Coverage U.S. Department of Education’s Composite Score Ratio Question & Answers – McClintock & Associates

U.S. Department of Education’s Composite Score Ratio Question & Answers – McClintock & Associates

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The U.S. Department of Education (ED) decided April 9th was a good time to issue guidance on multiple items. ED released an electronic announcement responding to questions submitted in regard to the composite score ratio which becomes effective July 1, 2020 as part of the Borrower Defense to Repayment regulations (BDTR). The questions and answers relate mostly to the treatment of leases under ASU 2016-02 and qualified long-term debt. Listed below are our highlights from this announcement. For institutions which are refinancing debt during the Covid-19 crisis, we believe it is critical to understand ED’s guidance related to pre- and post-implementation debt, and the impact on the composite score ratio.

The entire announcement is available on ED’s website – click here to access.

General

  • This announcement didn’t address any delays of the July 1, 2020 effective date of the composite score ratio changes within the BDTR regulations. This announcement only addressed questions submitted to ED subsequent to the release of the final BDTR regulations.
  • ED is in process of updating the eZ-Audit templates which is scheduled for completion in the spring of 2020.
  • M&A will be developing a standard supplement schedule which will be required to be included in the audited financial statements for reports issued after June 30, 2020. As a reminder, these supplemental schedules will enable ED to properly compute the composite score ratio mainly as a result of the pre- and post-implementation treatment of long-term debt and leases.

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