FINDING #2024-003 – 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, 2023 to June 30, 2024
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 students are 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. The District is paying students based on census enrollment and not adjusting for any changes in enrollment.
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: Yes.
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 was done on SAM to disburse aid based on current enrollment for the early Spring 2024 disbursements. This change reduced the amount in overpayments if students drop below ½ time for the semester, or withdrew completely.
In addition, the Financial Aid Office transitioned from 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:
• For Fall 2023 semester, the first early Pell disbursement was 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 Pell grant award for less than ½-time students.
• For Spring 2024 semester, after testing in SAM, we were able to disburse the early disbursements based on the current enrollment before Census which lowered the overpayment amount significantly.
• 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.
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 1/2-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.
FINDING #2024-004 – 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, 2023 to June 30, 2024
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 2024 and Spring 2024 were completed in after the end of each term, outside of the 30 day limit. Additionally, all forms appeared to have used the same 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: Yes.
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. A staff member has been hired and one of their main tasks is to do R2T4 Calculations. We reached out to the faculty to get the last day of academic related engagement. In cases where we are unable to get the last day of academic related engagement, the federal guidelines allow schools to use the midpoint of the payment period for the R2T4 calculations.
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 hired and 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 has transitioned from 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 #2024-003 – 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, 2023 to June 30, 2024
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 students are 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. The District is paying students based on census enrollment and not adjusting for any changes in enrollment.
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: Yes.
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 was done on SAM to disburse aid based on current enrollment for the early Spring 2024 disbursements. This change reduced the amount in overpayments if students drop below ½ time for the semester, or withdrew completely.
In addition, the Financial Aid Office transitioned from 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:
• For Fall 2023 semester, the first early Pell disbursement was 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 Pell grant award for less than ½-time students.
• For Spring 2024 semester, after testing in SAM, we were able to disburse the early disbursements based on the current enrollment before Census which lowered the overpayment amount significantly.
• 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.
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 1/2-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.
FINDING #2024-004 – 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, 2023 to June 30, 2024
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 2024 and Spring 2024 were completed in after the end of each term, outside of the 30 day limit. Additionally, all forms appeared to have used the same 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: Yes.
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. A staff member has been hired and one of their main tasks is to do R2T4 Calculations. We reached out to the faculty to get the last day of academic related engagement. In cases where we are unable to get the last day of academic related engagement, the federal guidelines allow schools to use the midpoint of the payment period for the R2T4 calculations.
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 hired and 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 has transitioned from SAM to the Colleague Financial Aid System (starting in 2024-25) which will provide a more automated and integrated process, with enhanced internal controls.