FINDING #2023-001 – INTERNAL CONTROLS OVER FEDERAL AWARDS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition / Context: During our audit procedures, we noted instances where a student was overpaid student financial aid due to changes in student units. The amounts reported to the Common Origination and Disbursement system were correctly reported resulting in the overpayment being disbursed from the District’s funds.
Questioned Costs: None.
Cause: Inadequate controls over student information changes allowing the institution to identify changes in enrollment and adjust financial aid accordingly.
Effect: Overpayment by the District where the District must use funds from the General Fund to cover the overpayment.
Repeat Finding: No.
Recommendation: We recommend the institution review its processes over student information changes and ensure that students are being awarded the proper amount of financial aid based on enrollment at the time of disbursement to prevent having to cover overpayments through the General Fund.
Corrective Action Plan: These initial Pell overpayments were incurred in the “early” Pell disbursements that occurred a week before the semester started and the first two weeks of the semester. The enrollment was reported correctly, but part of the issue was the current FA system (SAM) was not programmed to adjust the amount disbursed based on the student’s current enrollment at the time of disbursement. For the Spring 2024 semester, testing will be done on SAM to disburse aid based on current enrollment for the early disbursements. If successful, this change will reduce the amount in overpayments if students drop below ½ time for the semester, or withdraw completely.
In addition, the Financial Aid Office is transitioning from the SAM to the Colleague Financial Aid System (starting in 2024-25). Colleague is already programmed to disburse aid based on current enrollment status, so this will not be a recurring issue in the future.
Early Disbursement and Overpayment Notes:
• The 1st early Pell disbursement is based on 25% of a student’s semester award based on full-time enrollment. If a student is currently enrolled ½-time or higher when this disbursement is processed, they will receive the 25% award amount. If a student is enrolled in less than ½-time status (.5 units to 5.5 units), they will receive a $500 Pell disbursement to account for the lower semester Pell grant award for less than ½-time students.
• We understand students add/drop courses through the first two weeks of the semester. The final Pell grant award for the semester is adjusted to the student’s enrollment status on Census day. Students who are ½-time or higher at Census will not be a Pell overpayment for the semester since their Pell grant award will be at 50% or higher.
• For students who were enrolled at ½-time or higher at the time the early disbursement was processed, but then dropped to less than ½-time or withdrew completely by Census day, they will be considered a Pell overpayment.
o These types of overpayments are unavoidable. However, we will work on minimizing the dollar amount of these types of overpayments with the actions stated above. We will test the current FA system (SAM) to disburse the early disbursements based on current enrollment status before Census and monitor closely.
o Example: Currently, if a student is scheduled a $500 disbursement for the early 25% disbursement, and is enrolled ½ time, they will receive $500. With the change to actual enrollment (1/2 time for this case), the student will receive $250 instead of $500. If the student drops below ½-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.
FINDING #2023-002 – SPECIAL TESTS AND PROVISIONS: RETURN OF TITLE IV FUNDS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: In accordance with 34 CFR 668.22(j), An institution that is not required to take attendance must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the (1) payment period or period of enrollment, (2) academic year in which the student withdrew, or (3) educational program from which the student withdrew.
Condition / Context: During our audit procedures, we noted that all forms for Fall 2022 were completed in March of 2023 and all forms appeared to have used the same March date and drop date, regardless of the students actual drop date determination.
Questioned Costs: None.
Cause: Inadequate controls over the R2T4 process.
Effect: A lack of internal controls can result in noncompliance with provisions of the various programs within the Student Financial Assistance Cluster.
Repeat Finding: No.
Recommendation: We recommend the Colleges reinforce their review processes related to student drops and review all activity level controls to ensure compliance with the various requirements of the Student Financial Assistance Cluster.
Corrective Action Plan: Due to a sudden and unanticipated staffing shortage, R2T4 calculations were performed beyond the required timeframe. In the case where a student receives all F’s on their transcript, we cannot determine the students’ last date of attendance or academic activity, since F grades do not include this information (unlike W grades) and the college is a non-attendance taking institution. In this case, federal guidelines allows schools to use the midpoint of the payment period for the calculation. In these cases, all calculations would be based on the same date each term. In review of FA22 records, the calculations were performed in March 2023, but the withdrawal dates used to calculate eligibility were 10/21/22, the FA22 term midpoint.
All policies and procedures relating to R2T4 processing have been reviewed and updated, and a review of all prior year calculations will be performed as well, to ensure compliance. Additional staff have been trained in the process, and calculations are being performed. Adequate and trained staff will ensure that all required calculations are performed accurately, and according to required timelines.
In addition, the Financial Aid Office is transitioning from the SAM to the Colleague Financial Aid System (starting in 2024-25) which will provide a more automated and integrated process, with enhanced internal controls.
FINDING #2023-003 – SPECIAL TESTS AND PROVISIONS: VERIFICATIONS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information for those applicants selected for verification by ED. The institution shall require each applicant whose application is selected by ED to verify the information required for the Verification Tracking Group to which the applicant is assigned.
Condition / Context: During our review of student verifications, we noted one student who was flagged for verification based on their Institutional Student Information Record (ISIR) #2, however, the student was never informed by the institution and never completed the process, but was awarded financial aid.
Questioned Costs: None.
Cause: Turnover in the Student Financial Aid office resulted in the system not updating ISIRs for a period of time. The problem has been fixed since.
Effect: Potential for overpayment for students flagged and not verified.
Repeat Finding: No.
Recommendation: We recommend that all process in place are written down so that in the case of turnover, process can continue to operate effectively.
Corrective Action Plan: Two staff members were assigned the responsibility and access to EDExpress, which allows the college to send and receive files (including ISIRs) between college and federal databases. Both employees were placed on immediate and unanticipated leave in March 2023, leaving interim staff without the access or authority to perform these functions. It took some time to update the school’s online access and we were instructed to start using a different software, EDconnect, since EDExpress was becoming obsolete. Administration rights and training were then given to interim staff on uploading ISIRs into the FA system (SAM), and written procedures were developed. In the case cited here, the student was paid just as the staffing and access issues occurred. Updated records were not downloaded until after access to EDconnect was implemented and staff received guidance on the correct procedure. Initially, the student’s file did not require verification prior to payment, but changes made to their FAFSA generated ISIR #2 which resulted in a new request for verification. This update was received late due to the access and software issue.
Since that time, we have developed written procedures on this process and trained additional staff. We have also created a new awarding and disbursement process and timeline, including required reconciliation of COD authorizations versus student awards and disbursements. This ensures students are properly awarded and disbursed, and that records between the two systems match. Uploads and downloads are now performed multiple times per week to ensure records are frequently updated.
In addition, the Financial Aid Office transition from the SAM to the Colleague Financial System will automate these functions to run daily, eliminating the need for manual uploads and downloads of data between the systems. Staff absences will no longer impact the timely updating of records.
FINDING #2023-001 – INTERNAL CONTROLS OVER FEDERAL AWARDS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition / Context: During our audit procedures, we noted instances where a student was overpaid student financial aid due to changes in student units. The amounts reported to the Common Origination and Disbursement system were correctly reported resulting in the overpayment being disbursed from the District’s funds.
Questioned Costs: None.
Cause: Inadequate controls over student information changes allowing the institution to identify changes in enrollment and adjust financial aid accordingly.
Effect: Overpayment by the District where the District must use funds from the General Fund to cover the overpayment.
Repeat Finding: No.
Recommendation: We recommend the institution review its processes over student information changes and ensure that students are being awarded the proper amount of financial aid based on enrollment at the time of disbursement to prevent having to cover overpayments through the General Fund.
Corrective Action Plan: These initial Pell overpayments were incurred in the “early” Pell disbursements that occurred a week before the semester started and the first two weeks of the semester. The enrollment was reported correctly, but part of the issue was the current FA system (SAM) was not programmed to adjust the amount disbursed based on the student’s current enrollment at the time of disbursement. For the Spring 2024 semester, testing will be done on SAM to disburse aid based on current enrollment for the early disbursements. If successful, this change will reduce the amount in overpayments if students drop below ½ time for the semester, or withdraw completely.
In addition, the Financial Aid Office is transitioning from the SAM to the Colleague Financial Aid System (starting in 2024-25). Colleague is already programmed to disburse aid based on current enrollment status, so this will not be a recurring issue in the future.
Early Disbursement and Overpayment Notes:
• The 1st early Pell disbursement is based on 25% of a student’s semester award based on full-time enrollment. If a student is currently enrolled ½-time or higher when this disbursement is processed, they will receive the 25% award amount. If a student is enrolled in less than ½-time status (.5 units to 5.5 units), they will receive a $500 Pell disbursement to account for the lower semester Pell grant award for less than ½-time students.
• We understand students add/drop courses through the first two weeks of the semester. The final Pell grant award for the semester is adjusted to the student’s enrollment status on Census day. Students who are ½-time or higher at Census will not be a Pell overpayment for the semester since their Pell grant award will be at 50% or higher.
• For students who were enrolled at ½-time or higher at the time the early disbursement was processed, but then dropped to less than ½-time or withdrew completely by Census day, they will be considered a Pell overpayment.
o These types of overpayments are unavoidable. However, we will work on minimizing the dollar amount of these types of overpayments with the actions stated above. We will test the current FA system (SAM) to disburse the early disbursements based on current enrollment status before Census and monitor closely.
o Example: Currently, if a student is scheduled a $500 disbursement for the early 25% disbursement, and is enrolled ½ time, they will receive $500. With the change to actual enrollment (1/2 time for this case), the student will receive $250 instead of $500. If the student drops below ½-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.
FINDING #2023-002 – SPECIAL TESTS AND PROVISIONS: RETURN OF TITLE IV FUNDS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: In accordance with 34 CFR 668.22(j), An institution that is not required to take attendance must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the (1) payment period or period of enrollment, (2) academic year in which the student withdrew, or (3) educational program from which the student withdrew.
Condition / Context: During our audit procedures, we noted that all forms for Fall 2022 were completed in March of 2023 and all forms appeared to have used the same March date and drop date, regardless of the students actual drop date determination.
Questioned Costs: None.
Cause: Inadequate controls over the R2T4 process.
Effect: A lack of internal controls can result in noncompliance with provisions of the various programs within the Student Financial Assistance Cluster.
Repeat Finding: No.
Recommendation: We recommend the Colleges reinforce their review processes related to student drops and review all activity level controls to ensure compliance with the various requirements of the Student Financial Assistance Cluster.
Corrective Action Plan: Due to a sudden and unanticipated staffing shortage, R2T4 calculations were performed beyond the required timeframe. In the case where a student receives all F’s on their transcript, we cannot determine the students’ last date of attendance or academic activity, since F grades do not include this information (unlike W grades) and the college is a non-attendance taking institution. In this case, federal guidelines allows schools to use the midpoint of the payment period for the calculation. In these cases, all calculations would be based on the same date each term. In review of FA22 records, the calculations were performed in March 2023, but the withdrawal dates used to calculate eligibility were 10/21/22, the FA22 term midpoint.
All policies and procedures relating to R2T4 processing have been reviewed and updated, and a review of all prior year calculations will be performed as well, to ensure compliance. Additional staff have been trained in the process, and calculations are being performed. Adequate and trained staff will ensure that all required calculations are performed accurately, and according to required timelines.
In addition, the Financial Aid Office is transitioning from the SAM to the Colleague Financial Aid System (starting in 2024-25) which will provide a more automated and integrated process, with enhanced internal controls.
FINDING #2023-003 – SPECIAL TESTS AND PROVISIONS: VERIFICATIONS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information for those applicants selected for verification by ED. The institution shall require each applicant whose application is selected by ED to verify the information required for the Verification Tracking Group to which the applicant is assigned.
Condition / Context: During our review of student verifications, we noted one student who was flagged for verification based on their Institutional Student Information Record (ISIR) #2, however, the student was never informed by the institution and never completed the process, but was awarded financial aid.
Questioned Costs: None.
Cause: Turnover in the Student Financial Aid office resulted in the system not updating ISIRs for a period of time. The problem has been fixed since.
Effect: Potential for overpayment for students flagged and not verified.
Repeat Finding: No.
Recommendation: We recommend that all process in place are written down so that in the case of turnover, process can continue to operate effectively.
Corrective Action Plan: Two staff members were assigned the responsibility and access to EDExpress, which allows the college to send and receive files (including ISIRs) between college and federal databases. Both employees were placed on immediate and unanticipated leave in March 2023, leaving interim staff without the access or authority to perform these functions. It took some time to update the school’s online access and we were instructed to start using a different software, EDconnect, since EDExpress was becoming obsolete. Administration rights and training were then given to interim staff on uploading ISIRs into the FA system (SAM), and written procedures were developed. In the case cited here, the student was paid just as the staffing and access issues occurred. Updated records were not downloaded until after access to EDconnect was implemented and staff received guidance on the correct procedure. Initially, the student’s file did not require verification prior to payment, but changes made to their FAFSA generated ISIR #2 which resulted in a new request for verification. This update was received late due to the access and software issue.
Since that time, we have developed written procedures on this process and trained additional staff. We have also created a new awarding and disbursement process and timeline, including required reconciliation of COD authorizations versus student awards and disbursements. This ensures students are properly awarded and disbursed, and that records between the two systems match. Uploads and downloads are now performed multiple times per week to ensure records are frequently updated.
In addition, the Financial Aid Office transition from the SAM to the Colleague Financial System will automate these functions to run daily, eliminating the need for manual uploads and downloads of data between the systems. Staff absences will no longer impact the timely updating of records.