Audit 344463

Federal agency: U.S. Department of Commerce Federal program title: Connecting Minority Communities Pilot Program ALN: 11.028 Criteria or specific requirement: 2 CFR § 200.305 Federal payment stipulates a non-federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Commerce. Condition and Context: The Connecting Minority Communities Pilot Program funds drawn in advance were not limited to immediate cash requirements. Cause: Improper projection of immediate cash needs Effect: Excess cash maintained may not be available for use in other programs. Questioned costs: None Recommendation The College should implement a process to only drawdown funds for its immediate needs. Also, the College should compute interest earned on advance funds and refund the grantor when required.

Indirect Cost Federal agency: U.S. Department of Commerce Federal program title: Connecting Minority Communities Pilot Program ALN: 11.028 Criteria: 2 CFR 75.414 Indirect (F&A) costs states indirect (F&A) costs must be classified within two broad categories: “Facilities” and “Administration.” “Facilities” is defined as depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. “Administration” is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically under one of the subcategories of “Facilities” (including cross allocations from other pools, where applicable).” Condition and Context: The internal controls over recording and reporting indirect costs within the accounting system are not in place. Cause: The Institutions accounting system is not properly set up and there is no process for identifying indirect costs when processing transactions. Effect: Indirect costs charged of $36,217 was not clearly identified within the accounting system related the test of major programs and $66,027 related to non-major programs. Questioned costs: None Recommendation: Establish the correct classification of in the chart of accounts in accordance with 200.CFR 75.414 and incorporate a coding process to include recording indirect cost into the correct accounts. During the month-end close process allocate indirect cost to the grant/programs where indirect costs are.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.

Federal agency: U.S. Department of Commerce Federal program title: Connecting Minority Communities Pilot Program ALN: 11.028 Criteria or specific requirement: 2 CFR § 200.305 Federal payment stipulates a non-federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Commerce. Condition and Context: The Connecting Minority Communities Pilot Program funds drawn in advance were not limited to immediate cash requirements. Cause: Improper projection of immediate cash needs Effect: Excess cash maintained may not be available for use in other programs. Questioned costs: None Recommendation The College should implement a process to only drawdown funds for its immediate needs. Also, the College should compute interest earned on advance funds and refund the grantor when required.

Indirect Cost Federal agency: U.S. Department of Commerce Federal program title: Connecting Minority Communities Pilot Program ALN: 11.028 Criteria: 2 CFR 75.414 Indirect (F&A) costs states indirect (F&A) costs must be classified within two broad categories: “Facilities” and “Administration.” “Facilities” is defined as depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. “Administration” is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically under one of the subcategories of “Facilities” (including cross allocations from other pools, where applicable).” Condition and Context: The internal controls over recording and reporting indirect costs within the accounting system are not in place. Cause: The Institutions accounting system is not properly set up and there is no process for identifying indirect costs when processing transactions. Effect: Indirect costs charged of $36,217 was not clearly identified within the accounting system related the test of major programs and $66,027 related to non-major programs. Questioned costs: None Recommendation: Establish the correct classification of in the chart of accounts in accordance with 200.CFR 75.414 and incorporate a coding process to include recording indirect cost into the correct accounts. During the month-end close process allocate indirect cost to the grant/programs where indirect costs are.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.

Enrollment Status Change Federal agency: U.S. Department of Education Federal program title: Federal Direct Student Loan, Pell Grant, FSEOG ALN: 84.007, 84.063, 84.268 Criteria or specific requirement: Federal regulations 685.309(b)(2) and 682.610(c)(2) require institutions to report to NSLDS changes to a student’s enrollment status to less than half-time within 60 days of the date the school discovers that a student has ceased to be enrolled, or has failed to enroll, at least half-time. Condition and Context: The College did not update the enrollment status for seven of eight (88%) students within 60 days of the date students ceased to be enrolled, or has failed to enroll, at least half-time. Cause: The College’s controls for monitoring student enrollment changes was not operating effectively. Effect: Unreported student enrollment changes could result in incorrect calculation in the return of financial aid. Questioned costs: None Recommendation: Implement a policy to monitor student enrollment changes and update student changes within the required time-frame.