FAC Explorer

Audit 299883

FY End
2023-06-30
Total Expended
$7.59M
Findings
4
Programs
6
Organization: New England Conservatory of Music (MA)
Year: 2023 Accepted: 2024-03-28
Auditor: Rsm US LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
387847 2023-003 Significant Deficiency - G
387848 2023-004 Significant Deficiency - C
964289 2023-003 Significant Deficiency - G
964290 2023-004 Significant Deficiency - C

Programs

ALN Program Spent Major Findings
84.268 Federal Direct Student Loans $5.76M Yes 1
84.038 Federal Perkins Loans $1.21M Yes 0
84.033 Federal Work-Study Program $248,898 Yes 1
84.063 Federal Pell Grant Program $170,399 Yes 0
84.007 Federal Supplemental Educational Opportunity Grants $132,274 Yes 0
97.036 Covid-19 Disaster Grants - Public Assistance (presidentially Declared Disasters) $65,000 - 0

Contacts

Name Title Type
JNJGQ3UEW516 Richard Bowman Auditee
6175851725 Michele Divito Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: 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. De Minimis Rate Used: N Rate Explanation: The Conservatory has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance because, at this time, the Conservatory does not have any grants that require application of the overhead rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of New England Conservatory of Music (the Conservatory) under programs of the federal government for the year ended June 30, 2023. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) 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 the Conservatory, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Conservatory.
Title: Summary of Significant Accounting Policies Accounting Policies: 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. De Minimis Rate Used: N Rate Explanation: The Conservatory has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance because, at this time, the Conservatory does not have any grants that require application of the overhead rate. 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.
Title: Indirect Cost Rate Accounting Policies: 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. De Minimis Rate Used: N Rate Explanation: The Conservatory has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance because, at this time, the Conservatory does not have any grants that require application of the overhead rate. The Conservatory has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance because, at this time, the Conservatory does not have any grants that require application of the overhead rate.
Title: Federal Loan Programs Accounting Policies: 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. De Minimis Rate Used: N Rate Explanation: The Conservatory has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance because, at this time, the Conservatory does not have any grants that require application of the overhead rate. The amount of loans advanced during the year to students and parents under the Federal Direct Loan Program was $5,759,623. The Conservatory is responsible for the performance of certain administrative duties with respect to the Federal Direct Student Loan Program. These distributions and the related funding sources are not included in the Conservatory’s financial statements. The Federal Perkins Loan Program is administered directly by the Conservatory, and balances and transactions related to this program are included in the Conservatory’s basic financial statements. Loans outstanding at the beginning of the year and loans made during the year are included in the federal expenditures presented in the Schedule. Loans outstanding at June 30, 2023, under the revolving Federal Perkins Loan Program under Federal Assistance Listing number 84.038 totaled $1,017,855. There were no new loans awarded during the year ended June 30, 2023.

Finding Details

Finding 2023-003
U.S. Department of Education Student Financial Assistance Cluster Federal Work-Study Program Year ended June 30, 2023 ALN 84.033 Criteria: Per 34 CFR 675.26 (a)(1), the federal share of federal work study compensation paid to a student employed other than by a private for-profit organization, as described in CFR 675.23, may not exceed 75% unless otherwise approved. Condition: The Conservatory did not have a process in place to track and record into the accounting records the institutional share of the federal work study as amounts were paid to students during the year. Cause: Due to turnover within the accounting and student financial aid departments, the reconciliation process was not performed during the year. Effect: A lack of reconciliation of the institutional matching requirement could result in excess federal funds being drawn down during the year. Questioned costs: None identified. Prevalence: There was no reconciliation process during the year to record the institutional match for federal work study funds paid to students during the year. Total earned compensation for the federal work study program was $300,100. Repeat finding: This is not a repeat finding. Recommendation: We recommend the Conservatory implement a formal process throughout the year to ensure federal work study amounts paid to students are recorded between the institutional and federal share. In addition, a reconciliation process should be implemented to ensure amounts are properly recorded and this reconciliation should be reviewed and evidence of the review should be retained. View of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2023-004
Finding No. 2023-004—Cash Management U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans Year ended June 30, 2023 ALN 84.268 Criteria: Per 34 CFR 668.166 (a), institutions must disburse title IV funds to students by the end of the third business day following the date the institution draws down the funds. Condition: There were two drawdowns during the year for federal direct student loans which were not disbursed within three business days. The first instance resulted in the funds being held for 12 days before being disbursed or refunded and the second instance resulted in the funds being held for 38 days before being disbursed or refunded. Cause: Due to turnover within the accounting and student financial aid departments, there was no control in place during the year to review disbursements applied to students accounts to ensure that the funds were or will be disbursed within three business days prior to drawing down funds. Effect: Maintaining excess cash could result in the Department of Education requiring the institution to request funds under the reimbursement payment method or heightened cash monitoring program payment method. Questioned costs: The total amount which was drawn down and not disbursed within the required time frame was $77,691. These funds were ultimately disbursed or refunded. Prevalence: Identified two instances of excess cash throughout the year in reviewing cumulative disbursements and draw downs. Repeat finding: This is not a repeat finding. Recommendation: We recommend management implement a control to regularly monitor disbursements and reconcile to drawdowns to ensure applicable requirements are met. View of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2023-003
U.S. Department of Education Student Financial Assistance Cluster Federal Work-Study Program Year ended June 30, 2023 ALN 84.033 Criteria: Per 34 CFR 675.26 (a)(1), the federal share of federal work study compensation paid to a student employed other than by a private for-profit organization, as described in CFR 675.23, may not exceed 75% unless otherwise approved. Condition: The Conservatory did not have a process in place to track and record into the accounting records the institutional share of the federal work study as amounts were paid to students during the year. Cause: Due to turnover within the accounting and student financial aid departments, the reconciliation process was not performed during the year. Effect: A lack of reconciliation of the institutional matching requirement could result in excess federal funds being drawn down during the year. Questioned costs: None identified. Prevalence: There was no reconciliation process during the year to record the institutional match for federal work study funds paid to students during the year. Total earned compensation for the federal work study program was $300,100. Repeat finding: This is not a repeat finding. Recommendation: We recommend the Conservatory implement a formal process throughout the year to ensure federal work study amounts paid to students are recorded between the institutional and federal share. In addition, a reconciliation process should be implemented to ensure amounts are properly recorded and this reconciliation should be reviewed and evidence of the review should be retained. View of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2023-004
Finding No. 2023-004—Cash Management U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans Year ended June 30, 2023 ALN 84.268 Criteria: Per 34 CFR 668.166 (a), institutions must disburse title IV funds to students by the end of the third business day following the date the institution draws down the funds. Condition: There were two drawdowns during the year for federal direct student loans which were not disbursed within three business days. The first instance resulted in the funds being held for 12 days before being disbursed or refunded and the second instance resulted in the funds being held for 38 days before being disbursed or refunded. Cause: Due to turnover within the accounting and student financial aid departments, there was no control in place during the year to review disbursements applied to students accounts to ensure that the funds were or will be disbursed within three business days prior to drawing down funds. Effect: Maintaining excess cash could result in the Department of Education requiring the institution to request funds under the reimbursement payment method or heightened cash monitoring program payment method. Questioned costs: The total amount which was drawn down and not disbursed within the required time frame was $77,691. These funds were ultimately disbursed or refunded. Prevalence: Identified two instances of excess cash throughout the year in reviewing cumulative disbursements and draw downs. Repeat finding: This is not a repeat finding. Recommendation: We recommend management implement a control to regularly monitor disbursements and reconcile to drawdowns to ensure applicable requirements are met. View of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.