Criteria: The Code of Federal Regulations 34 CFR 690.83(b)(2), 34 CFR 682.610, 34 CFR 685.309, and 34 CFR 674.19 require institutes review, update, and certify student enrollment reporting roster on timely and accurate basis at both the campus and program level. Enrollment roster should be certified every 60 days or every other month.
Condition and Context: The Sacramento and San Jose campuses did not accurately report student status changes and enrollment status changes at both the campus-level and program-level to the National Student Loan Data System (NSLDS). The Sacramento campus also did not report student status changes timely to NSLDS.
During our testing of 40 borrowers under the Federal Direct Loan Program and/or Federal Pell Grant recipients that had a reduction or increase in attendance levels, graduated, withdrew, dropped out, or enrolled but never attended during the fiscal year, we noted the following at the Sacramento and San Jose Campuses:
- At the Sacramento campus, the status changes for five graduates were reported incorrectly to the NSLDS as a Full-time, Withdrawn or Half-time status rather than Graduated (G) status. The campus-level enrollment and the program-level enrollment status reported to the NSLDS also did not agree to campus records for these five students. Additionally, for three of these students, the student status was reported to NSLDS late by up to 189 days, which is greater than the allowed 60 days after the change was known by the campus.
Condition and Context: We reviewed 6 in-scope campuses and a sample of 40 students who graduated, withdrew, or had a change in enrollment during the fiscal year. Out of the 7 sample students selected from California State University, Sacramento (the Campus), 5 students’ enrollment information was not uploaded correctly or certified on a timely basis. Out of the 6 sample students selected from San Jose State University (the Campus), 6 students’ enrollment information was not uploaded correctly.
- At the San Jose campus, the status changes for six students were reported incorrectly to the NSLDS as Withdrawn or Three-quarters time status rather than Graduated (G) or Withdrawn (W) status. The campus-level enrollment status reported to NSLDS did not agree to campus records for these six students and the program-level enrollment status reported to NSLDS did not agree to campus records for four of these students.
Cause and Effect: The campus experienced major personnel changes in the registrar office and
did not have adequate staffing in place to monitor the required procedures.
Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA.
Condition and Context: The University did not have adequate controls relating to the reporting of expenditures on the SEFA for the Supplemental Nutrition Assistance Program Cluster (SNAP).
The Sacramento campus confirmed with the Chancellor’s office that the final federal expenditures for the SNAP program in the current fiscal year were $6,206,313. It was determined subsequent to this notification that the actual federal expenditures for the SNAP program were $3,806,804. The University’s overall SEFA is compiled by the Chancellor’s office and relies on each campus to have internal controls that ensure completeness and accuracy of the SEFA.
Cause and Effect: In discussing these conditions with the University, they stated the error was primarily due to not completing a final reconciliation and review of the SNAP federal expenditures before being provided to the Chancellor’s office. Additionally, management review controls at the campus over the completeness and accuracy of SEFA were not designed to detect the error. The inadequate review procedures over the SNAP federal expenditures resulted in an error on the SEFA for SNAP program expenditures in the amount of $2,399,509.
Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance.
Criteria: In accordance with 2 CFR 200 Subpart E, the University is required to conform to allowability of cost provisions, and 2 CFR 200.303 requires the organization to establish and maintain effective controls over federal awards. Allowable costs charged to federal programs, whether direct or indirect, must be allowable and be determined in accordance with Subpart E – Cost Principles of the Uniform Guidance. Effective internal controls should include procedures to ensure federal expenditures and amounts are for activities allowed or unallowed and allowable costs/cost principles, as well as accurately and completely reported on the SEFA.
The Sacramento campus confirmed with the Chancellor’s office that the final federal expenditures for the SNAP Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA.
According to 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i)Be supported by a system of internal control that providesreasonable assurance that the charges are accurate, allowable,and properly allocated;
(ii)Be incorporated into the official records of the recipient orsubrecipient;
(iii)Reasonably reflect the total activity for which the employee iscompensated by the recipient or subrecipient, not exceeding 100percent of compensated activities;
(iv)Encompass federally-assisted and all other activities compensatedby the recipient or subrecipient on an integrated basis but mayinclude the use of subsidiary records as defined in the recipient's orsubrecipient's written policy;
(v)Comply with the established accounting policies and procedures ofthe recipient or subrecipient and
(vi)Support the distribution of the employee's salary or wages amongspecific activities or cost objectives if the employee works on morethan one Federal award; a Federal award and non-Federal award;an indirect cost activity and a direct cost activity; two or moreindirect activities allocated using different allocation bases; or anunallowable activity and a direct or indirect cost activity.
Cause and Effect: The University receives Supplemental Nutrition Assistance Program (SNAP) Cluster program funding at its Sacramento campus to perform nutrition outreach and education services to residents of the State of California. The Sacramento campus administers the SNAP Cluster nutrition education programs through its College of Continuing Education (CCE) and Population Research Center (PRC) offices. SNAP Cluster program expenditures are primarily comprised of payroll for program personnel performing various program activities and related fringe benefits and indirect costs.
During our testing of 2 payroll expenditures for CCE employees (totaling $7,101) and 4 payroll expenditures for PRC employees (totaling $6,285), we noted effort reports detailing 100% of the employee's activities were not prepared for certain employees. Upon further investigation and discussion with CCE and PRC program management, we noted effort reports were not prepared for any employees whose payroll expenditures were charged to the SNAP Cluster program.
The payroll expenditures and related costs impacted by the inadequate effort reports, are described in the table below:
Expenditure category
Questioned costs
Excerpt of total SNAP Cluster program expenditures by impacted expenditure category
Payroll
$1,544,086
$1,544,086
Fringe benefits
$708,935
$708,935
Indirect costs
$563,225
$735,693
Total
$2,816,276
$2,988,714
Total SNAP Cluster program expenditures were $4,267,405 for the year ended June 30, 2024.
We noted additional instances of noncompliance as follows:
• In our testing of 6 payroll expenditures, the hourly payroll ratesused to prepare the quarterly payroll remittances submitted to theState of California exceeded the actual payroll rates paid for 2employees resulting in an overcharge of payroll, fringe benefits,and indirect costs to the SNAP program of $2,880, $1,152 and$1,008, respectively. As these 2 employees did not have effortreports as discussed above, payroll, fringe benefits, and indirectcosts associated with these 2 employees has already beenincluded in the table above.
In addition, we noted the Sacramento campus has not established adequate internal controls to ensure: (1) payroll expenditures charged to the SNAP Cluster program are properly determined and supported in accordance with the requirements of the Uniform Guidance and (2) fringe benefit and indirect costs are properly calculated by applying the approved fringe or indirect cost rate to a base that includes only allowable costs.
Cause and Effect: The errors noted above were primarily due to insufficient controls over the establishment and tracking of SNAP Cluster program activities as federal funding within Sacramento’s general ledger. As a result, a portion of SNAP program expenditures and activities were not processed in accordance with applicable federal guidelines. Additional errors noted above relate to insufficient controls over the accuracy of the payroll, fringe benefits, and indirect cost charged to the SNAP Cluster program. The inadequate review procedures over payroll, fringe benefits, and indirect cost expenditures resulted in unallowable charges to the SNAP Cluster program in the amount of $2,816,276.
Criteria: The Code of Federal Regulations 34 CFR 690.83(b)(2), 34 CFR 682.610, 34 CFR 685.309, and 34 CFR 674.19 require institutes review, update, and certify student enrollment reporting roster on timely and accurate basis at both the campus and program level. Enrollment roster should be certified every 60 days or every other month.
Condition and Context: The Sacramento and San Jose campuses did not accurately report student status changes and enrollment status changes at both the campus-level and program-level to the National Student Loan Data System (NSLDS). The Sacramento campus also did not report student status changes timely to NSLDS.
During our testing of 40 borrowers under the Federal Direct Loan Program and/or Federal Pell Grant recipients that had a reduction or increase in attendance levels, graduated, withdrew, dropped out, or enrolled but never attended during the fiscal year, we noted the following at the Sacramento and San Jose Campuses:
- At the Sacramento campus, the status changes for five graduates were reported incorrectly to the NSLDS as a Full-time, Withdrawn or Half-time status rather than Graduated (G) status. The campus-level enrollment and the program-level enrollment status reported to the NSLDS also did not agree to campus records for these five students. Additionally, for three of these students, the student status was reported to NSLDS late by up to 189 days, which is greater than the allowed 60 days after the change was known by the campus.
Condition and Context: We reviewed 6 in-scope campuses and a sample of 40 students who graduated, withdrew, or had a change in enrollment during the fiscal year. Out of the 7 sample students selected from California State University, Sacramento (the Campus), 5 students’ enrollment information was not uploaded correctly or certified on a timely basis. Out of the 6 sample students selected from San Jose State University (the Campus), 6 students’ enrollment information was not uploaded correctly.
- At the San Jose campus, the status changes for six students were reported incorrectly to the NSLDS as Withdrawn or Three-quarters time status rather than Graduated (G) or Withdrawn (W) status. The campus-level enrollment status reported to NSLDS did not agree to campus records for these six students and the program-level enrollment status reported to NSLDS did not agree to campus records for four of these students.
Cause and Effect: The campus experienced major personnel changes in the registrar office and
did not have adequate staffing in place to monitor the required procedures.
Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the entity’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA.
Condition and Context: The University did not have adequate controls relating to the reporting of expenditures on the SEFA for the Supplemental Nutrition Assistance Program Cluster (SNAP).
The Sacramento campus confirmed with the Chancellor’s office that the final federal expenditures for the SNAP program in the current fiscal year were $6,206,313. It was determined subsequent to this notification that the actual federal expenditures for the SNAP program were $3,806,804. The University’s overall SEFA is compiled by the Chancellor’s office and relies on each campus to have internal controls that ensure completeness and accuracy of the SEFA.
Cause and Effect: In discussing these conditions with the University, they stated the error was primarily due to not completing a final reconciliation and review of the SNAP federal expenditures before being provided to the Chancellor’s office. Additionally, management review controls at the campus over the completeness and accuracy of SEFA were not designed to detect the error. The inadequate review procedures over the SNAP federal expenditures resulted in an error on the SEFA for SNAP program expenditures in the amount of $2,399,509.
Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the University from completing an audit in accordance with the timelines of Uniform Guidance.
Criteria: In accordance with 2 CFR 200 Subpart E, the University is required to conform to allowability of cost provisions, and 2 CFR 200.303 requires the organization to establish and maintain effective controls over federal awards. Allowable costs charged to federal programs, whether direct or indirect, must be allowable and be determined in accordance with Subpart E – Cost Principles of the Uniform Guidance. Effective internal controls should include procedures to ensure federal expenditures and amounts are for activities allowed or unallowed and allowable costs/cost principles, as well as accurately and completely reported on the SEFA.
The Sacramento campus confirmed with the Chancellor’s office that the final federal expenditures for the SNAP Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws and regulations. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA.
According to 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i)Be supported by a system of internal control that providesreasonable assurance that the charges are accurate, allowable,and properly allocated;
(ii)Be incorporated into the official records of the recipient orsubrecipient;
(iii)Reasonably reflect the total activity for which the employee iscompensated by the recipient or subrecipient, not exceeding 100percent of compensated activities;
(iv)Encompass federally-assisted and all other activities compensatedby the recipient or subrecipient on an integrated basis but mayinclude the use of subsidiary records as defined in the recipient's orsubrecipient's written policy;
(v)Comply with the established accounting policies and procedures ofthe recipient or subrecipient and
(vi)Support the distribution of the employee's salary or wages amongspecific activities or cost objectives if the employee works on morethan one Federal award; a Federal award and non-Federal award;an indirect cost activity and a direct cost activity; two or moreindirect activities allocated using different allocation bases; or anunallowable activity and a direct or indirect cost activity.
Cause and Effect: The University receives Supplemental Nutrition Assistance Program (SNAP) Cluster program funding at its Sacramento campus to perform nutrition outreach and education services to residents of the State of California. The Sacramento campus administers the SNAP Cluster nutrition education programs through its College of Continuing Education (CCE) and Population Research Center (PRC) offices. SNAP Cluster program expenditures are primarily comprised of payroll for program personnel performing various program activities and related fringe benefits and indirect costs.
During our testing of 2 payroll expenditures for CCE employees (totaling $7,101) and 4 payroll expenditures for PRC employees (totaling $6,285), we noted effort reports detailing 100% of the employee's activities were not prepared for certain employees. Upon further investigation and discussion with CCE and PRC program management, we noted effort reports were not prepared for any employees whose payroll expenditures were charged to the SNAP Cluster program.
The payroll expenditures and related costs impacted by the inadequate effort reports, are described in the table below:
Expenditure category
Questioned costs
Excerpt of total SNAP Cluster program expenditures by impacted expenditure category
Payroll
$1,544,086
$1,544,086
Fringe benefits
$708,935
$708,935
Indirect costs
$563,225
$735,693
Total
$2,816,276
$2,988,714
Total SNAP Cluster program expenditures were $4,267,405 for the year ended June 30, 2024.
We noted additional instances of noncompliance as follows:
• In our testing of 6 payroll expenditures, the hourly payroll ratesused to prepare the quarterly payroll remittances submitted to theState of California exceeded the actual payroll rates paid for 2employees resulting in an overcharge of payroll, fringe benefits,and indirect costs to the SNAP program of $2,880, $1,152 and$1,008, respectively. As these 2 employees did not have effortreports as discussed above, payroll, fringe benefits, and indirectcosts associated with these 2 employees has already beenincluded in the table above.
In addition, we noted the Sacramento campus has not established adequate internal controls to ensure: (1) payroll expenditures charged to the SNAP Cluster program are properly determined and supported in accordance with the requirements of the Uniform Guidance and (2) fringe benefit and indirect costs are properly calculated by applying the approved fringe or indirect cost rate to a base that includes only allowable costs.
Cause and Effect: The errors noted above were primarily due to insufficient controls over the establishment and tracking of SNAP Cluster program activities as federal funding within Sacramento’s general ledger. As a result, a portion of SNAP program expenditures and activities were not processed in accordance with applicable federal guidelines. Additional errors noted above relate to insufficient controls over the accuracy of the payroll, fringe benefits, and indirect cost charged to the SNAP Cluster program. The inadequate review procedures over payroll, fringe benefits, and indirect cost expenditures resulted in unallowable charges to the SNAP Cluster program in the amount of $2,816,276.