Criteria
As per the Code of Federal Regulations 34 CFR 668.166: Excess cash is any amount of FSA funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Department; or deposited or transferred to its depository account previously disbursed FSA funds received from the Department, such as those resulting from award adjustments, recoveries, or cancellations. Sometimes a school cannot disburse funds in the required three business days because of circumstances outside the school’s control.
If unusual circumstances exist, an institution may retain an excess cash tolerance for up to seven calendar days for an additional amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The school must immediately return to the Department any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the additional seven-day tolerance period.
Condition found
In three (3) of thirty-six (36) G-5 Direct Loan drawdowns from the San Juan Campus, refunds were not properly returned on G-5 during the required period of ten (10) days (3 business days plus an additional 7 calendar days).
Cause
The University’s cash management procedures allowed for some “lag time” regarding timeliness when returning funds. In addition, the procedures lacked specific information of the persons involved in the return of funds process and the reports that will be used. Finally, when funds needed to be returned, the University waited until the next drawdown of funds and netted the amount instead of immediately returning the funds.
Effect
Return of funds in G-5 took two (2) weeks longer than the seven-day tolerance period, resulting in excess cash.
Upon a finding that an institution maintained excess cash for any amount or time over that allowed in the tolerance provisions in paragraph (b) of section § 668.166, the actions the Secretary may take include, but are not limited to—
(1) Requiring the institution to reimburse the Secretary for the costs the Federal government incurred in providing that excess cash to the institution; and
(2) Providing funds to the institution under the reimbursement payment method or heightened cash monitoring payment method described in § 668.162(c) and (d), respectively.
Questioned cost
None. The funds were returned.
Context
Total amount of funds returned that were late was $213,905 out of a total of $587,434 for the campus of San Juan. The average of days passed between disbursement date and date of return of funds was 20 days.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend that the University includes in its internal procedures and policies specific processes of returning of funds. These procedures need to include the time frame of returning of funds and the personnel responsible for it. This will assist the safeguard of timeliness and accuracy of the funds returned to the federal program.
Criteria
Section §200.405 Allocable costs of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards indicates that a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received. This standard is met, among other things, if the cost charged is incurred specifically for the federal award.
Condition found
During our audit procedures on the allowable activities and cost principles compliance requirements, we noted that on one (1) instance, a vendor invoiced $42,350, and the institution claimed $42,675 to the program for the same transaction.
Cause
The $325 difference is an invoice that was duplicated and accidentally invoiced to HEERF.
Effect
The amount charged to the federal program exceeded the actual amount paid. Program expenditures were overstated, and the University over-charged $325 to the federal program. Such condition may cause the federal grantor to issue warnings and/or impose penalties to the University.
Questioned cost
Known questioned cost amounts to $325.
Context
As part of our compliance tests with allowable costs and cost principles, we selected seven (7) expense transactions of the Higher Education Emergency Relief Fund - Institutional Portion program amounting to $1,991,533. Our test disclosed one (1) instance where the amount charged to the federal program exceeded the actual amount paid. The transaction was related to mental health services provided to students.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
The University´s program staff and management should ensure that the amounts charged to the federal award and disbursed to the employees are accurate and under the correct contract rates. Monthly reconciliation of all expenses, including of salaries charged to program versus actual hours incurred must be timely performed.
Criteria
The University’s purchasing policy (as amended by Procedimiento de Autorización de Compra de Bienes y Servicios, normative letter No. 2021-04) is created with the purpose of establishing procedures governing the initiation, authorization, and review of all expenditures. To facilitate this process the accounting department developed a checklist that promotes the compliance with this policy. The normative letter No. 2021-04 establishes that the purchases of goods and services continue to be executed through the generation of purchase requisitions in the Webadvisor electronic platform, which also serves as reference to verify the availability of funds before the creation of the purchase requisition.
Also, the normative letter No. 2021-04 requires the completion of an authorization form (appendix A form) for the purchase of goods and services that exceed $5,000. The authorization form establishes different levels of approvals that are necessary depending on the amount of the disbursement.
Condition found
During our audit procedures on internal controls over compliance of federal programs of the University, we tested a sample of seven (7) transactions and noted that one (1) of the transactions did not include the required Appendix A.
Cause
Management believes this to be an isolated case. The particular transaction involved a renovation of a prior year's contract with a known vendor, previously evaluated, and this led to an oversight in not requiring Annex A.
Effect
Not having the complete documentation at the time of recording or payment may lead to inadequate recording, duplicity in recording or in payment, or recording invalid transactions. This condition does not allow for a proper and complete examination of the financial activities performed by the Institution. The internal controls established to ensure that the check requests are eligible under the University’s policy and that each invoice or contract is paid only one time were not properly executed. Pertinent information regarding costs, authorizations, obligations, type of expenditures and its allowability, among other requirements, was not properly documented.
Questioned cost
None
Context
Of the seven (7) total transactions amounting to $129,114 selected for examination of the federal program “COVID-19-Higher Education Emergency Relief Fund - Institutional Portion”, the required requisition was missing for one (1) transaction, totaling $21,760.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend management to strengthen its quality review controls for disbursements in order to make certain that all documentation required by the University´s policies and procedures are complete and authorized.
Criteria
As per the Code of Federal Regulations 34 CFR 668.166: Excess cash is any amount of FSA funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Department; or deposited or transferred to its depository account previously disbursed FSA funds received from the Department, such as those resulting from award adjustments, recoveries, or cancellations. Sometimes a school cannot disburse funds in the required three business days because of circumstances outside the school’s control.
If unusual circumstances exist, an institution may retain an excess cash tolerance for up to seven calendar days for an additional amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The school must immediately return to the Department any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the additional seven-day tolerance period.
Condition found
In three (3) of thirty-six (36) G-5 Direct Loan drawdowns from the San Juan Campus, refunds were not properly returned on G-5 during the required period of ten (10) days (3 business days plus an additional 7 calendar days).
Cause
The University’s cash management procedures allowed for some “lag time” regarding timeliness when returning funds. In addition, the procedures lacked specific information of the persons involved in the return of funds process and the reports that will be used. Finally, when funds needed to be returned, the University waited until the next drawdown of funds and netted the amount instead of immediately returning the funds.
Effect
Return of funds in G-5 took two (2) weeks longer than the seven-day tolerance period, resulting in excess cash.
Upon a finding that an institution maintained excess cash for any amount or time over that allowed in the tolerance provisions in paragraph (b) of section § 668.166, the actions the Secretary may take include, but are not limited to—
(1) Requiring the institution to reimburse the Secretary for the costs the Federal government incurred in providing that excess cash to the institution; and
(2) Providing funds to the institution under the reimbursement payment method or heightened cash monitoring payment method described in § 668.162(c) and (d), respectively.
Questioned cost
None. The funds were returned.
Context
Total amount of funds returned that were late was $213,905 out of a total of $587,434 for the campus of San Juan. The average of days passed between disbursement date and date of return of funds was 20 days.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend that the University includes in its internal procedures and policies specific processes of returning of funds. These procedures need to include the time frame of returning of funds and the personnel responsible for it. This will assist the safeguard of timeliness and accuracy of the funds returned to the federal program.
Criteria
Section §200.405 Allocable costs of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards indicates that a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received. This standard is met, among other things, if the cost charged is incurred specifically for the federal award.
Condition found
During our audit procedures on the allowable activities and cost principles compliance requirements, we noted that on one (1) instance, a vendor invoiced $42,350, and the institution claimed $42,675 to the program for the same transaction.
Cause
The $325 difference is an invoice that was duplicated and accidentally invoiced to HEERF.
Effect
The amount charged to the federal program exceeded the actual amount paid. Program expenditures were overstated, and the University over-charged $325 to the federal program. Such condition may cause the federal grantor to issue warnings and/or impose penalties to the University.
Questioned cost
Known questioned cost amounts to $325.
Context
As part of our compliance tests with allowable costs and cost principles, we selected seven (7) expense transactions of the Higher Education Emergency Relief Fund - Institutional Portion program amounting to $1,991,533. Our test disclosed one (1) instance where the amount charged to the federal program exceeded the actual amount paid. The transaction was related to mental health services provided to students.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
The University´s program staff and management should ensure that the amounts charged to the federal award and disbursed to the employees are accurate and under the correct contract rates. Monthly reconciliation of all expenses, including of salaries charged to program versus actual hours incurred must be timely performed.
Criteria
The University’s purchasing policy (as amended by Procedimiento de Autorización de Compra de Bienes y Servicios, normative letter No. 2021-04) is created with the purpose of establishing procedures governing the initiation, authorization, and review of all expenditures. To facilitate this process the accounting department developed a checklist that promotes the compliance with this policy. The normative letter No. 2021-04 establishes that the purchases of goods and services continue to be executed through the generation of purchase requisitions in the Webadvisor electronic platform, which also serves as reference to verify the availability of funds before the creation of the purchase requisition.
Also, the normative letter No. 2021-04 requires the completion of an authorization form (appendix A form) for the purchase of goods and services that exceed $5,000. The authorization form establishes different levels of approvals that are necessary depending on the amount of the disbursement.
Condition found
During our audit procedures on internal controls over compliance of federal programs of the University, we tested a sample of seven (7) transactions and noted that one (1) of the transactions did not include the required Appendix A.
Cause
Management believes this to be an isolated case. The particular transaction involved a renovation of a prior year's contract with a known vendor, previously evaluated, and this led to an oversight in not requiring Annex A.
Effect
Not having the complete documentation at the time of recording or payment may lead to inadequate recording, duplicity in recording or in payment, or recording invalid transactions. This condition does not allow for a proper and complete examination of the financial activities performed by the Institution. The internal controls established to ensure that the check requests are eligible under the University’s policy and that each invoice or contract is paid only one time were not properly executed. Pertinent information regarding costs, authorizations, obligations, type of expenditures and its allowability, among other requirements, was not properly documented.
Questioned cost
None
Context
Of the seven (7) total transactions amounting to $129,114 selected for examination of the federal program “COVID-19-Higher Education Emergency Relief Fund - Institutional Portion”, the required requisition was missing for one (1) transaction, totaling $21,760.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend management to strengthen its quality review controls for disbursements in order to make certain that all documentation required by the University´s policies and procedures are complete and authorized.