Audit 2371

Information on the Federal Program: HEERF Student Aid Portion (CFDA Number 84.425E) – U.S. Department of Education Criteria: In accordance with 2 CFR § 200.305(b) of the Uniform Guidance, which applies to the HEERF grants, grantees must seek to minimize the time between drawing down funds from the G5 system and applying those funds to support a grant award’s activities. Consistent with this requirement, grantees must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 per year must be remitted to the Federal government. An institution should refund any portion of the HEERF award that it does not have an immediate ability to expend on emergency financial grants to students, until the institution has a plan for the orderly distribution of the remainder of the funds. It can then be re-drawn from the institution’s account in G5. Condition and context: The University transferred $633,744.80 of HEERF Student Aid funds to the KSU Foundation for the purpose of holding and releasing funds to students. $146,242.20 of checks distributed to students did not clear, and these funds were held in an interest-bearing account. As of September 15, 2023, accrued interest totaled $49,145.32. The University did not refund the portion of the HEERF award that could not be disbursed back to the Department of Education. The University also did not remit the accrued interest. Questioned Cost: $195,387.52 Cause: The University did not have an adequate plan in place for the orderly distribution of the HEERF award that it did not have an immediate ability to expend. Effect: The University is not in compliance with the refund requirements of the Department of Education. Recommendation: We recommend the University complete the refund procedures for the funds unable to be disbursed and the accrued interest. Additionally, the University should establish a plan for the orderly distribution of the remaining balance of HEERF funds.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF HBCU Portion (CFDA Number 84.425J) – U.S. Department of Education Criteria: Consistent with the cost principles of the Uniform Guidance (2 CFR part 200 subpart E), the calculation of lost revenue must measure the amount of baseline revenue and lost revenue consistently. Condition and context: Lost Revenue for Fall 2021 was calculated by applying the year over year percent increase in dining revenue to the Fall 2020 dormitory revenue and subtracting that amount from the actual Fall 2021 dormitory revenue. Questioned Cost: $688,691 Cause: To measure the amount of baseline revenue and lost revenue consistently, lost revenue should have been calculated by subtracting Fall 2020 dormitory revenue from Fall 2021 revenue. Effect: Lost Revenue was incorrectly calculated and therefore overstated. Recommendation: We recommend the University improve its administration of federal grant funds. KSU should allocate sufficient staff and resources to ensure grant funds are spent in accordance with federal statutes, regulations, and the terms and conditions of the various federal awards. Specifically, the University should implement and maintain an effective system of internal controls over the administration of federal funds to ensure funds are spent appropriately and in accordance with the specific grant requirements. This includes establishing a chain of command that has the skills and knowledge to administer the funds and to ensure internal controls are not circumvented or overridden.

Information on the Federal Program: Governor's Emergency Education Relief Fund (CFDA Number 84.425C) – U.S. Department of Education Criteria: PL 116-260 Consolidated Appropriations Act Section 312(c)(2) Grant funds must be used to provide emergency support to institutions of higher education that have been significantly impacted by coronavirus to support the ability to continue to provide educational services and support the on-going functionality of the institution. Condition and context: Out of a population of 62 expenditures made from GEER funds totaling $324,757.83, we sampled 4 expenditures totaling $17,268.97. Out of this sample, $5,245 were spent on activities other than those outlined in the CRRSA Act and Grant Agreement. Questioned Cost: $5,245 Cause: The University used a portion of GEER funds to purchase bounce houses, waterslides, and other inflatable entertainment for a Pre-College Academy Event. Effect: The University is not in compliance with the allowable activities outlined by the awarding agency. Recommendation: We recommend the University must ensure staff working in federal grant expenditures are provided adequate training to understand the specific requirements of each grant and federal spending in general, including the factors affecting allowability of costs, that costs are necessary and reasonable for the performance of the award, and that sufficient documentation is maintained.

Information on the Federal Program: Higher Education Institutional Aid (CFDA Number 84.031B) – U.S. Department of Education Criteria: The University’s approval policy, as found in the Business Policies and Procedures Manual, is outlined as follows: • Purchases less than $10,000 require the approval of the Department Chair and the Principal Investigator • Purchases between $10,000 and $19,999.99 require the additional approval of the Director, Dean, Associate/Assistant VP • Purchases between $20,000 and $39,999.99 require the additional approval of the Vice President • Purchases above $40,000 require the additional approval of the President Condition and context: Out of a population of 1,377 expenses, including 18 credit card payments, made from Title III Part B funds totaling $1,774,314, we sampled 42 expenditures, including 2 credit card payments, totaling $353,291.64. Out of this sample, the University failed to correctly provide approval for both of the credit card expenditures. The University pays all corporate credit card bills without consideration of the published approval policy. Therefore, it can be determined that the entire population of credit card expenditures were not in compliance with the above criteria. Questioned Cost: $12,639 Cause: The University pays all corporate credit card bills without consideration of the published approval policy. Effect: Expenditures made via corporate credit card were not subject to approval. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: 34 CFR 685.309 Unless the school expects to submit its next enrollment report within 60 days, the school must notify the lender or the guaranty agency within 30 days if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis. The school is responsible for timely reporting whether they report directly or via a third-party servicer. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, the University failed to correctly notify NSLDS of 4 students’ status changes. Questioned Cost: $0 Cause: The University relied on their third-party servicer for reporting and did not have a control in place to ensure that timely reporting of all status changes to NSLDS was occurring. Effect: Without notification, the NSLDS is not timely updated of change in status for students who have withdrawn or graduated. Timely notification allows the NSLDS to determine when a student enters repayment status. Recommendation: We recommend that the University establish controls to review the reporting function of their third-party servicer to ensure student enrollment status in the NSLDS is updated in a timely manner in compliance with Federal requirements.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 685.309 Unless the school expects to submit its next enrollment report within 60 days, the school must notify the lender or the guaranty agency within 30 days if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis. The school is responsible for timely reporting whether they report directly or via a third-party servicer. Condition and context: Out of a population of 127 graduated students, we sampled 17. Out of this sample, the University failed to correctly notify NSLDS of 9 students’ status changes. Questioned Cost: $0 Cause: The University relied on their third-party servicer for reporting and did not have a control in place to ensure that timely reporting of all status changes to NSLDS was occurring. Effect: Without notification, the NSLDS is not timely updated of change in status for students who have withdrawn or graduated. Timely notification allows the NSLDS to determine when a student enters repayment status. Recommendation: We recommend that the University establish controls to review the reporting function of their third-party servicer to ensure student enrollment status in the NSLDS is updated in a timely manner in compliance with Federal requirements.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 668.165(a)(2)(ii) If an institution credits a student ledger account with Direct Loan, or Federal Perkins Loan funds, the institution must notify the student or parent of their right to cancel all or a portion of that loan, or loan disbursement. Condition and context: Out of a population of 79 graduate students, we sampled 8. Out of this sample, the Institution failed to provide evidence that right to cancel notifications were sent for all 8 students. Questioned Cost: $0 Cause: The University did not have a control in place to ensure right to cancel notifications were sent to graduate students timely. Effect: The University is not in compliance with Title 34, Section 668.165 with respect to graduate students. Recommendation: We recommend that the University establish controls to ensure that right to cancel notifications are sent when student ledger accounts are credited.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: CARES Act Section 3508(2) The Secretary shall require each institution using a waiver relating to the withdrawal of recipients to report the number of such recipients, the amount of grant or loan assistance associated with each such recipient, and the total amount of grant or loan assistance for which each institution has not returned assistance under title IV to the Secretary. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, 1 student was not included in the Summary Level Report of Title IV Funds not returned. Questioned Cost: $0 Cause: There was not a procedure in place to verify that all students who withdrew from the institution after attending less than 60% of the enrollment period were included in the Summary Level Report. Effect: The number of recipients and total amount of assistance included in the Summary Level Report was understated. Recommendation: We recommend the University develop a procedure for verifying that all withdrawn students are included in the Summary Level Report to ensure accurate reporting to the Department.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 685.304(b)(3) If a student borrower withdraws from school, exit counseling must be provided either electronically, by mailing, or by email to the student borrower within 30 days. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, the University failed to correctly notify 2 students of exit counseling. Questioned Cost: $0 Cause: The University did not have a control in place to ensure exit counseling notifications were sent to withdrawn students timely. Effect: The University is not in compliance with Title 34, Section 685.304 with respect to the referenced withdrawn students. Recommendation: We recommend that the University establish controls to ensure that exit counseling notifications are sent timely once a student has been identified as a withdrawal.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: 34 CFR 685.304(b)(1) A school must ensure that exit counseling is conducted with each Direct Subsidized Loan or Direct Unsubsidized Loan borrower and graduate or professional student Direct PLUS Loan borrower shortly before the student borrower ceases at least half-time study at the school. Condition and context: Out of a population of 127 graduated students, we sampled 17. Out of this sample, the University failed to correctly notify 6 students of exit counseling. Questioned Cost: $0 Cause: The University did not have a control in place to ensure exit counseling notifications were sent to graduating students timely. Effect: The University is not in compliance with Title 34, Section 685.304 with respect to the referenced graduated students. Recommendation: We recommend that the University establish controls to ensure that exit counseling notifications are sent prior to the date of graduation.

Information on the Federal Program: HEERF Student Aid Portion (CFDA Number 84.425E) – U.S. Department of Education Criteria: In accordance with 2 CFR § 200.305(b) of the Uniform Guidance, which applies to the HEERF grants, grantees must seek to minimize the time between drawing down funds from the G5 system and applying those funds to support a grant award’s activities. Consistent with this requirement, grantees must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 per year must be remitted to the Federal government. An institution should refund any portion of the HEERF award that it does not have an immediate ability to expend on emergency financial grants to students, until the institution has a plan for the orderly distribution of the remainder of the funds. It can then be re-drawn from the institution’s account in G5. Condition and context: The University transferred $633,744.80 of HEERF Student Aid funds to the KSU Foundation for the purpose of holding and releasing funds to students. $146,242.20 of checks distributed to students did not clear, and these funds were held in an interest-bearing account. As of September 15, 2023, accrued interest totaled $49,145.32. The University did not refund the portion of the HEERF award that could not be disbursed back to the Department of Education. The University also did not remit the accrued interest. Questioned Cost: $195,387.52 Cause: The University did not have an adequate plan in place for the orderly distribution of the HEERF award that it did not have an immediate ability to expend. Effect: The University is not in compliance with the refund requirements of the Department of Education. Recommendation: We recommend the University complete the refund procedures for the funds unable to be disbursed and the accrued interest. Additionally, the University should establish a plan for the orderly distribution of the remaining balance of HEERF funds.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF Student, Institutional, and HBCU Portion (CFDA Numbers 84.425E, 84.425F and 84.425J) – U.S. Department of Education Criteria: Federal Register Vol. 85, No. 169 and Vol. 86, No. 91 state that reporting information must appear in a format and location that is easily accessible to the public. This information must be updated no later than 10 days after the end of each calendar quarter. Additionally, HEERF FAQ guidance published by the Department of Education states an Institution can discharge the complete balance of student debt and reimburse themselves through their HEERF grants by reporting the discharge as lost revenue from academic sources in quarterly and annual reporting. Condition and context: The University does not have the Student Funding Report for the quarter ending June 30, 2021, posted to their website. The Institutional and HBCU portion report for the quarter ended September 30, 2020, was created more than 10 days after the end of the quarter. The Institutional and HBCU portion report for the quarter ended March 31, 2021, was revised in 2022, and the University removed the original version from their website; therefore it cannot be determined if the reporting deadline requirement was met. The University reported discharge of student debt as emergency financial aid grants to students instead of lost revenue from academic sources on the Institutional and HBCU portion report for the quarter ended March 31, 2021. Questioned Cost: $0 Cause: The University did not have the proper internal controls in place to ensure that all reporting requirements were being adhered to. Effect: The University is not in compliance with the reporting requirements for HEERF funds specified by the Department of Education. Recommendation: We recommend the University review all previously submitted reporting documentation and update per the current guidance posted by the Department of Education. The University should also implement and maintain an effective system of internal controls over the administration of HEERF funds to ensure funds are reported accurately and timely, in accordance with grant requirements.

Information on the Federal Program: HEERF HBCU Portion (CFDA Number 84.425J) – U.S. Department of Education Criteria: Consistent with the cost principles of the Uniform Guidance (2 CFR part 200 subpart E), the calculation of lost revenue must measure the amount of baseline revenue and lost revenue consistently. Condition and context: Lost Revenue for Fall 2021 was calculated by applying the year over year percent increase in dining revenue to the Fall 2020 dormitory revenue and subtracting that amount from the actual Fall 2021 dormitory revenue. Questioned Cost: $688,691 Cause: To measure the amount of baseline revenue and lost revenue consistently, lost revenue should have been calculated by subtracting Fall 2020 dormitory revenue from Fall 2021 revenue. Effect: Lost Revenue was incorrectly calculated and therefore overstated. Recommendation: We recommend the University improve its administration of federal grant funds. KSU should allocate sufficient staff and resources to ensure grant funds are spent in accordance with federal statutes, regulations, and the terms and conditions of the various federal awards. Specifically, the University should implement and maintain an effective system of internal controls over the administration of federal funds to ensure funds are spent appropriately and in accordance with the specific grant requirements. This includes establishing a chain of command that has the skills and knowledge to administer the funds and to ensure internal controls are not circumvented or overridden.

Information on the Federal Program: Governor's Emergency Education Relief Fund (CFDA Number 84.425C) – U.S. Department of Education Criteria: PL 116-260 Consolidated Appropriations Act Section 312(c)(2) Grant funds must be used to provide emergency support to institutions of higher education that have been significantly impacted by coronavirus to support the ability to continue to provide educational services and support the on-going functionality of the institution. Condition and context: Out of a population of 62 expenditures made from GEER funds totaling $324,757.83, we sampled 4 expenditures totaling $17,268.97. Out of this sample, $5,245 were spent on activities other than those outlined in the CRRSA Act and Grant Agreement. Questioned Cost: $5,245 Cause: The University used a portion of GEER funds to purchase bounce houses, waterslides, and other inflatable entertainment for a Pre-College Academy Event. Effect: The University is not in compliance with the allowable activities outlined by the awarding agency. Recommendation: We recommend the University must ensure staff working in federal grant expenditures are provided adequate training to understand the specific requirements of each grant and federal spending in general, including the factors affecting allowability of costs, that costs are necessary and reasonable for the performance of the award, and that sufficient documentation is maintained.

Information on the Federal Program: Higher Education Institutional Aid (CFDA Number 84.031B) – U.S. Department of Education Criteria: The University’s approval policy, as found in the Business Policies and Procedures Manual, is outlined as follows: • Purchases less than $10,000 require the approval of the Department Chair and the Principal Investigator • Purchases between $10,000 and $19,999.99 require the additional approval of the Director, Dean, Associate/Assistant VP • Purchases between $20,000 and $39,999.99 require the additional approval of the Vice President • Purchases above $40,000 require the additional approval of the President Condition and context: Out of a population of 1,377 expenses, including 18 credit card payments, made from Title III Part B funds totaling $1,774,314, we sampled 42 expenditures, including 2 credit card payments, totaling $353,291.64. Out of this sample, the University failed to correctly provide approval for both of the credit card expenditures. The University pays all corporate credit card bills without consideration of the published approval policy. Therefore, it can be determined that the entire population of credit card expenditures were not in compliance with the above criteria. Questioned Cost: $12,639 Cause: The University pays all corporate credit card bills without consideration of the published approval policy. Effect: Expenditures made via corporate credit card were not subject to approval. Recommendation: We recommend the University develop a procedure for ensuring all expenditures made via corporate credit card receive appropriate approval.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: 34 CFR 685.309 Unless the school expects to submit its next enrollment report within 60 days, the school must notify the lender or the guaranty agency within 30 days if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis. The school is responsible for timely reporting whether they report directly or via a third-party servicer. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, the University failed to correctly notify NSLDS of 4 students’ status changes. Questioned Cost: $0 Cause: The University relied on their third-party servicer for reporting and did not have a control in place to ensure that timely reporting of all status changes to NSLDS was occurring. Effect: Without notification, the NSLDS is not timely updated of change in status for students who have withdrawn or graduated. Timely notification allows the NSLDS to determine when a student enters repayment status. Recommendation: We recommend that the University establish controls to review the reporting function of their third-party servicer to ensure student enrollment status in the NSLDS is updated in a timely manner in compliance with Federal requirements.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 685.309 Unless the school expects to submit its next enrollment report within 60 days, the school must notify the lender or the guaranty agency within 30 days if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis. The school is responsible for timely reporting whether they report directly or via a third-party servicer. Condition and context: Out of a population of 127 graduated students, we sampled 17. Out of this sample, the University failed to correctly notify NSLDS of 9 students’ status changes. Questioned Cost: $0 Cause: The University relied on their third-party servicer for reporting and did not have a control in place to ensure that timely reporting of all status changes to NSLDS was occurring. Effect: Without notification, the NSLDS is not timely updated of change in status for students who have withdrawn or graduated. Timely notification allows the NSLDS to determine when a student enters repayment status. Recommendation: We recommend that the University establish controls to review the reporting function of their third-party servicer to ensure student enrollment status in the NSLDS is updated in a timely manner in compliance with Federal requirements.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Student Financial Aid Cluster (CFDA Numbers 84.268, 84.063, 84.033, 84.379, 84.038, and 84.007) – U.S. Department of Education Criteria: 34 CFR 668.164(h) If a credit balance occurred on or before the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the first day of class. If a credit balance occurred after the first day of class of a payment period, it must be paid directly to the student or parent within 14 days of the occurrence. Condition and context: Out of a population of 1,425 students, we sampled 40. Out of this sample, the Institution failed to reimburse student account credit balances timely for 5 students. Questioned Cost: $3,987 Cause: The University did not have a control in place to ensure credit balances were refunded timely. Effect: The University is not in compliance with Title 34, Section CFR 668.164 with respect to the referenced students. Recommendation: We recommend that the University establish controls to ensure that credit balances are paid directly to the student or parent within 14 days of the first day of class or within 14 days of the occurrence of a credit balance.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 668.165(a)(2)(ii) If an institution credits a student ledger account with Direct Loan, or Federal Perkins Loan funds, the institution must notify the student or parent of their right to cancel all or a portion of that loan, or loan disbursement. Condition and context: Out of a population of 79 graduate students, we sampled 8. Out of this sample, the Institution failed to provide evidence that right to cancel notifications were sent for all 8 students. Questioned Cost: $0 Cause: The University did not have a control in place to ensure right to cancel notifications were sent to graduate students timely. Effect: The University is not in compliance with Title 34, Section 668.165 with respect to graduate students. Recommendation: We recommend that the University establish controls to ensure that right to cancel notifications are sent when student ledger accounts are credited.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: CARES Act Section 3508(2) The Secretary shall require each institution using a waiver relating to the withdrawal of recipients to report the number of such recipients, the amount of grant or loan assistance associated with each such recipient, and the total amount of grant or loan assistance for which each institution has not returned assistance under title IV to the Secretary. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, 1 student was not included in the Summary Level Report of Title IV Funds not returned. Questioned Cost: $0 Cause: There was not a procedure in place to verify that all students who withdrew from the institution after attending less than 60% of the enrollment period were included in the Summary Level Report. Effect: The number of recipients and total amount of assistance included in the Summary Level Report was understated. Recommendation: We recommend the University develop a procedure for verifying that all withdrawn students are included in the Summary Level Report to ensure accurate reporting to the Department.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) –U.S. Department of Education Criteria: 34 CFR 685.304(b)(3) If a student borrower withdraws from school, exit counseling must be provided either electronically, by mailing, or by email to the student borrower within 30 days. Condition and context: Out of a population of 34 withdrawn students, we sampled 7. Out of this sample, the University failed to correctly notify 2 students of exit counseling. Questioned Cost: $0 Cause: The University did not have a control in place to ensure exit counseling notifications were sent to withdrawn students timely. Effect: The University is not in compliance with Title 34, Section 685.304 with respect to the referenced withdrawn students. Recommendation: We recommend that the University establish controls to ensure that exit counseling notifications are sent timely once a student has been identified as a withdrawal.

Information on the Federal Program: Federal Direct Student Loan Program (CFDA Number 84.268) – U.S. Department of Education Criteria: 34 CFR 685.304(b)(1) A school must ensure that exit counseling is conducted with each Direct Subsidized Loan or Direct Unsubsidized Loan borrower and graduate or professional student Direct PLUS Loan borrower shortly before the student borrower ceases at least half-time study at the school. Condition and context: Out of a population of 127 graduated students, we sampled 17. Out of this sample, the University failed to correctly notify 6 students of exit counseling. Questioned Cost: $0 Cause: The University did not have a control in place to ensure exit counseling notifications were sent to graduating students timely. Effect: The University is not in compliance with Title 34, Section 685.304 with respect to the referenced graduated students. Recommendation: We recommend that the University establish controls to ensure that exit counseling notifications are sent prior to the date of graduation.