Audit 1535

FY End
2023-05-31
Total Expended
$3.09M
Findings
10
Programs
5
Organization: Art Academy of Cincinnati (OH)
Year: 2023 Accepted: 2023-10-27

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
795 2023-001 Significant Deficiency - E
796 2023-002 Significant Deficiency - P
797 2023-001 Significant Deficiency - E
798 2023-001 Significant Deficiency - E
799 2023-001 Significant Deficiency - E
577237 2023-001 Significant Deficiency - E
577238 2023-002 Significant Deficiency - P
577239 2023-001 Significant Deficiency - E
577240 2023-001 Significant Deficiency - E
577241 2023-001 Significant Deficiency - E

Programs

ALN Program Spent Major Findings
84.268 Federal Direct Student Loans $2.33M Yes 2
84.063 Federal Pell Grant Program $704,513 Yes 1
84.007 Federal Supplemental Educational Opportunity Grants $25,250 Yes 1
84.033 Federal Work-Study Program $25,000 Yes 1
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $10,178 - 0

Contacts

Name Title Type
RFJ7GBCZUGZ1 Lea Wagener Auditee
5135628779 Stephanie Allgeyer Auditor
No contacts on file

Notes to SEFA

Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of Art Academy of Cincinnati under programs of the federal government for the year ended May 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Art Academy of Cincinnati, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Art Academy of Cincinnati. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Art Academy of Cincinnati has elected not to use the 10 percent de Minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Direct Student Loans [AL #84.268]. Criteria: Per the Federal Student Aid Handbook, a leave of absence must meet certain conditions to be counted as a temporary interruption in a student’s education instead of being counted as a withdrawal requiring a school to perform an R2T4 calculation. If an LOA does not meet the conditions for an approved leave of absence, the student is considered to have ceased attendance and to have withdrawn from the school, and the school is required to perform an R2T4 calculation. Condition: 1 out of 17 students selected for enrollment reporting was incorrectly determined and reported as having a leave of absence. Additionally, 1 out of 6 students selected for return of funds testing was incorrectly determined and reported as having a leave of absence. Neither of the students met the conditions for an approved leave of absence and therefore should have been reported as withdrawn from the Academy. Cause: Both students mentioned to registrar they were considering a leave of absence. Once the semester ended, the Academy issued an administrative leave of absence. Effect: The Academy incorrectly reported two students as having a leave of absence when they should have been reported as withdrawn from the Academy. Questioned Costs: None Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their policy and procedures with regards to reporting leave of absences for students to ensure they meet the requirements. Views of Responsible Officials: When the leave of absence (LOA) notices are sent by the Registrar to Financial Aid, the Registrar will provide confirmation to Financial Aid the proper approved LOA criteria has been reviewed.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Direct Student Loans [AL #84.268]. Criteria: Per the Federal Student Aid Handbook, a leave of absence must meet certain conditions to be counted as a temporary interruption in a student’s education instead of being counted as a withdrawal requiring a school to perform an R2T4 calculation. If an LOA does not meet the conditions for an approved leave of absence, the student is considered to have ceased attendance and to have withdrawn from the school, and the school is required to perform an R2T4 calculation. Condition: 1 out of 17 students selected for enrollment reporting was incorrectly determined and reported as having a leave of absence. Additionally, 1 out of 6 students selected for return of funds testing was incorrectly determined and reported as having a leave of absence. Neither of the students met the conditions for an approved leave of absence and therefore should have been reported as withdrawn from the Academy. Cause: Both students mentioned to registrar they were considering a leave of absence. Once the semester ended, the Academy issued an administrative leave of absence. Effect: The Academy incorrectly reported two students as having a leave of absence when they should have been reported as withdrawn from the Academy. Questioned Costs: None Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their policy and procedures with regards to reporting leave of absences for students to ensure they meet the requirements. Views of Responsible Officials: When the leave of absence (LOA) notices are sent by the Registrar to Financial Aid, the Registrar will provide confirmation to Financial Aid the proper approved LOA criteria has been reviewed.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.
Federal Program: Federal Supplemental Educational Opportunity Grants (FSEOG) [AL #84.007], Federal Work-Study Program [AL #84.033], Federal Pell Grant Program [AL #84.063], and Federal Direct Student Loans [AL #84.268]. Criteria: Per CFR 668.14(22)(1) An institution will not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or the aware of financial aid, to any person or entity who is engaged in any student recruitment or admission activity, or in making decisions regarding the award of title IV, HEA program funds. Condition: The Vice President of recruitment was paid a performance bonus of $9,000 based on completing a defense which included his recruitment activities for the year. Cause: The Academy gave all executive positions a bonus during the year but required them to complete a defense based on their current year accomplishments. Effect: The Academy paid a $9,000 bonus based on securing enrollments. Questioned Costs: $9,000 Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Academy review their bonus process and consider awarding blanket bonuses not based on performance. Views of Responsible Officials: For the executive bonuses, the Academy will award a blanket bonus based on a review from the executives’ team members and manager, which provides feedback on overall leadership and communication skills associated with the teams being managed by the Academy executives. The review will not include any data regarding attaining certain metric related to recruitment and attaining any financial aid goals.