Audit 331516

Criteria: Institutional policies and procedures, as well as best practices for P-Card usage, require that all purchases made with a P-Card be authorized, documented, and for legitimate business purposes. Condition: Refer to Finding 2024-005 in the Financial Statement Findings section (Section II) of this report. Fraudulent charges totaling $79,772 were charged to a federal grant via misuse of a P-Card. Subsequent to the draw down of federal funds management identified the misuse and immediately adjusted a subsequent request effectively reimbursing the federal funding source for funds received. Cause: The misuse of the P-Card occurred due to insufficient oversight and monitoring of P-Card transactions by supervisory personnel, lack of adherence to established controls, and untimely monthly reconciliation’s. In addition it appears there was inadequate training for P-Card holders on proper usage and documentation requirements. Effect: Unauthorized purchases totaling $85,258 represent a financial loss to the institution and unauthorized amounts being charged to a federal grant. As noted above the federal grant was immediately reimbursed for these unallowed costs. Questioned Costs: None Context: After the reimbursement made total costs charged to the grant award were approximately $65,000 none of which were P-Card transactions. The grant was administered solely by one individual who was terminated by the University and the award has been closed out. Repeat Finding: No Recommendation: It is recommended that the institution strengthens its controls over P-Card usage by implementing the following measures: 1. Conducting a thorough review of all P-Card transactions to identify any additional unauthorized purchases. 2. Enhancing training programs for P-Card holders to ensure they understand the policies and procedures for proper P-Card usage. 3. Increasing the frequency and rigor of P-Card transaction reviews and audits. 4. Implementing stricter approval processes for high-value transactions. Views of responsible individuals: Management acknowledges the finding and will take immediate corrective actions. This includes conducting a comprehensive review of current P-Card transactions, revising the training program for P-Card holders, and enhancing the monitoring and approval processes to prevent future misuse.

Criteria: According to federal regulations 34CFR 674.19, institutions must retain an original or electronically signed Master Promissory Note for at least three years after all loans made under the Master Promissory Note are satisfied. In addition, 2CFR 200.303 requires the entity to maintain internal controls to provide reasonable assurance that the entity is managing the Federal award in compliance with Federal statues, regulations and the terms and conditions of the Federal award. Condition: During testing of Perkins Loan Recordkeeping and Record Retention, we identified that the University could not provide a signed promissory note for five out of 25 loans selected for testing. Cause: The absence of signed forms may be due to inadequate oversight in the loan documentation process or a lapse in following established procedures for collecting and retaining signed forms. Effect: The lack of signed Perkins Loan forms in the files could result in non-compliance with federal regulations and creates challenges in enforcing loan agreements. Questioned Costs: None Context: During testing of Perkins Loan Recordkeeping and Record Retention we identified that the University could not provide a signed promissory note for five out of 25 loans (20%) selected for testing. The account status was current with ongoing payments for all five loans. Repeat Finding: No Recommendation: It is recommended that the institution reviews and strengthens its procedures for collecting and retaining signed promissory notes. This may include a review of all outstanding Perkins loan borrowers and review of related documentation to ensure a Master Promissory Note has been signed and retained. View of responsible individuals: Management understands the recommendation and the need to retain the records of former students. While we are certain that required documentation exists or existed at one time, the passage of time and lack of digital backups impaired our ability to produce the documents. Since the loans related to the missing documents are currently in repayment status, we feel that provides assurance that the former students did sign the loan agreement. However, we understand the need to retain all critical forms for our students.

Criteria: Institutional policies and procedures, as well as best practices for P-Card usage, require that all purchases made with a P-Card be authorized, documented, and for legitimate business purposes. Condition: Refer to Finding 2024-005 in the Financial Statement Findings section (Section II) of this report. Fraudulent charges totaling $79,772 were charged to a federal grant via misuse of a P-Card. Subsequent to the draw down of federal funds management identified the misuse and immediately adjusted a subsequent request effectively reimbursing the federal funding source for funds received. Cause: The misuse of the P-Card occurred due to insufficient oversight and monitoring of P-Card transactions by supervisory personnel, lack of adherence to established controls, and untimely monthly reconciliation’s. In addition it appears there was inadequate training for P-Card holders on proper usage and documentation requirements. Effect: Unauthorized purchases totaling $85,258 represent a financial loss to the institution and unauthorized amounts being charged to a federal grant. As noted above the federal grant was immediately reimbursed for these unallowed costs. Questioned Costs: None Context: After the reimbursement made total costs charged to the grant award were approximately $65,000 none of which were P-Card transactions. The grant was administered solely by one individual who was terminated by the University and the award has been closed out. Repeat Finding: No Recommendation: It is recommended that the institution strengthens its controls over P-Card usage by implementing the following measures: 1. Conducting a thorough review of all P-Card transactions to identify any additional unauthorized purchases. 2. Enhancing training programs for P-Card holders to ensure they understand the policies and procedures for proper P-Card usage. 3. Increasing the frequency and rigor of P-Card transaction reviews and audits. 4. Implementing stricter approval processes for high-value transactions. Views of responsible individuals: Management acknowledges the finding and will take immediate corrective actions. This includes conducting a comprehensive review of current P-Card transactions, revising the training program for P-Card holders, and enhancing the monitoring and approval processes to prevent future misuse.

Criteria: According to federal regulations 34CFR 674.19, institutions must retain an original or electronically signed Master Promissory Note for at least three years after all loans made under the Master Promissory Note are satisfied. In addition, 2CFR 200.303 requires the entity to maintain internal controls to provide reasonable assurance that the entity is managing the Federal award in compliance with Federal statues, regulations and the terms and conditions of the Federal award. Condition: During testing of Perkins Loan Recordkeeping and Record Retention, we identified that the University could not provide a signed promissory note for five out of 25 loans selected for testing. Cause: The absence of signed forms may be due to inadequate oversight in the loan documentation process or a lapse in following established procedures for collecting and retaining signed forms. Effect: The lack of signed Perkins Loan forms in the files could result in non-compliance with federal regulations and creates challenges in enforcing loan agreements. Questioned Costs: None Context: During testing of Perkins Loan Recordkeeping and Record Retention we identified that the University could not provide a signed promissory note for five out of 25 loans (20%) selected for testing. The account status was current with ongoing payments for all five loans. Repeat Finding: No Recommendation: It is recommended that the institution reviews and strengthens its procedures for collecting and retaining signed promissory notes. This may include a review of all outstanding Perkins loan borrowers and review of related documentation to ensure a Master Promissory Note has been signed and retained. View of responsible individuals: Management understands the recommendation and the need to retain the records of former students. While we are certain that required documentation exists or existed at one time, the passage of time and lack of digital backups impaired our ability to produce the documents. Since the loans related to the missing documents are currently in repayment status, we feel that provides assurance that the former students did sign the loan agreement. However, we understand the need to retain all critical forms for our students.