Audit 35595

2022-003 Perkin?s Loan Recordkeeping and Record Retention Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Perkins Loans ? CFDA 84.038 Criteria: In accordance with 34 CFR 674.19.(e) - Institutions must retain original or true and exact copies of promissory and master promissory notes, repayment records, and cancellation and deferment requests for each Perkins loan made. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct noncompliance in a timely manner. Condition: One student with a Perkin?s loan in repayment did not have the proper documentation retained in the student?s file in accordance with 34 CFR 674.19(e). Questioned Costs: None identified. Context: Out of a sample of 50 students selected for testing, 25 of the students were in repayment and 25 of the students had a loan that was paid, canceled or assigned within the previous three years. One student of the 25 in repayment was not compliant with the recordkeeping and record retention requirements. The population for loans in repayment includes 437 students. Effect: The College was not compliant with Federal requirements of the Student Financial Assistance Program. Cause: The loan file for one student could not be located and is believed to be misfiled. Internal controls over filing and usage of loan files should be sufficient to track and ensure timely refiling after use. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the College review the filing processes for loan files to refine controls in place on filing and tracking of such files. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is reviewing the process and will refine the process as necessary.

2022-001 Federal Pell Grant Over-awards Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Pell Grant ? CFDA 84.063 Criteria: 34 CFR 690.80 provides regulations to institutions for the recalculation of Federal Pell Grant awards when a change to a student?s expected family contribution occurs as a result of a correction of a clerical or arithmetic error under 24 CFR 690.14 or a correction based on information required as a result of verification under 34 CFR 668 subpart E. The institution should have sufficient internal controls over program compliance to detect and correct clerical errors made by the institution?s personnel when packaging aid and to identify and adjust student financial assistance awards based on changes made to a student?s Free Application for Federal Student Aid (FAFSA) after initial packaging. Condition: Two students were awarded Federal Pell Grants based on incorrect expected family contributions. The students were awarded $11,340 in aggregate when the students were only eligible for $9,890 in the aggregate. This resulted in an over-award of $1,450. Questioned Costs: $1,450 Context: Out of a sample of 40 students, two students were awarded Federal Pell Grants at an incorrect amount. One of the two students awarded the incorrect amount had updated their FAFSA to reflect a change in parent for their expected family contribution and the change was not identified and reflected in the Federal Pell Grant awarded by the College. One of the two students awarded an incorrect amount had their expected family contribution updated during verification and the updated expected family contribution contained a clerical error resulting in the over-award. Effect: Student financial assistance can be awarded based on inaccurate information resulting in an under- or over-award of student financial assistance. Cause: The internal control regarding review of the financial aid packaging prior to disbursement failed to detect and correct the errors. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the College refine the process of financial aid packaging to ensure the review of financial aid packaging prior to disbursement is performed at a level of detail necessary to identify clerical errors in packaging information based on review of the most recent FAFSA. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is refining the review process to include a more detailed comparison of packaging information.

2022-002 National Student Loan Data System (NSLDS) Enrollment Reporting Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Direct Loans ? CFDA 84.268 Criteria: 34 CFR 690.83(b)(2) and 34 CFR 685.309 provide regulations to institutions for the accurate and timely reporting of student enrollment information. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates. The institution should have sufficient internal controls over program compliance to report information accurately and timely. Condition: Two students that withdrew from the College were found to have status change effective dates reported to the NSLDS that were not compliant with enrollment reporting guidelines. Questioned Costs: None identified. Context: Out of a sample of 40 students with status changes, two students that withdrew were identified as having incorrect dates reported to the NSLDS. Effect: Dates reported to the Department of Education impact when students enter repayment on outstanding student loans. Incorrect dates reported to the Department of Education could cause a student to enter repayment at a time not in accordance with related regulations. Cause: For the 2021-2022 award year, the College modified its process for enrollment reporting of withdrawing students. The enrollment services department had responsibility for identifying the effective withdraw dates prior to the 2021-2022 award year. This responsibility was transferred to the student affairs department for the 2021- 2022 award year. Personnel within student affairs did not have sufficient knowledge of regulations governing the determination of effective withdraw dates for student?s with student financial assistance. The internal controls over review of the effective dates provided to the registrar?s office by student affairs were not effective at preventing or detecting and correcting the incorrectly identified effective dates. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the individual responsible for identifying effective status change dates for withdrawing students receive training on the requirements. We also recommend that a separate individual with sufficient knowledge of the reporting requirements perform a periodic and timely review of the student status change effective dates to verify the dates are in accordance with Department of Education regulations. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is identifying the appropriate resource and providing training on the regulations to those involved within the enrollment reporting process.

2022-003 Perkin?s Loan Recordkeeping and Record Retention Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Perkins Loans ? CFDA 84.038 Criteria: In accordance with 34 CFR 674.19.(e) - Institutions must retain original or true and exact copies of promissory and master promissory notes, repayment records, and cancellation and deferment requests for each Perkins loan made. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct noncompliance in a timely manner. Condition: One student with a Perkin?s loan in repayment did not have the proper documentation retained in the student?s file in accordance with 34 CFR 674.19(e). Questioned Costs: None identified. Context: Out of a sample of 50 students selected for testing, 25 of the students were in repayment and 25 of the students had a loan that was paid, canceled or assigned within the previous three years. One student of the 25 in repayment was not compliant with the recordkeeping and record retention requirements. The population for loans in repayment includes 437 students. Effect: The College was not compliant with Federal requirements of the Student Financial Assistance Program. Cause: The loan file for one student could not be located and is believed to be misfiled. Internal controls over filing and usage of loan files should be sufficient to track and ensure timely refiling after use. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the College review the filing processes for loan files to refine controls in place on filing and tracking of such files. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is reviewing the process and will refine the process as necessary.

2022-001 Federal Pell Grant Over-awards Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Pell Grant ? CFDA 84.063 Criteria: 34 CFR 690.80 provides regulations to institutions for the recalculation of Federal Pell Grant awards when a change to a student?s expected family contribution occurs as a result of a correction of a clerical or arithmetic error under 24 CFR 690.14 or a correction based on information required as a result of verification under 34 CFR 668 subpart E. The institution should have sufficient internal controls over program compliance to detect and correct clerical errors made by the institution?s personnel when packaging aid and to identify and adjust student financial assistance awards based on changes made to a student?s Free Application for Federal Student Aid (FAFSA) after initial packaging. Condition: Two students were awarded Federal Pell Grants based on incorrect expected family contributions. The students were awarded $11,340 in aggregate when the students were only eligible for $9,890 in the aggregate. This resulted in an over-award of $1,450. Questioned Costs: $1,450 Context: Out of a sample of 40 students, two students were awarded Federal Pell Grants at an incorrect amount. One of the two students awarded the incorrect amount had updated their FAFSA to reflect a change in parent for their expected family contribution and the change was not identified and reflected in the Federal Pell Grant awarded by the College. One of the two students awarded an incorrect amount had their expected family contribution updated during verification and the updated expected family contribution contained a clerical error resulting in the over-award. Effect: Student financial assistance can be awarded based on inaccurate information resulting in an under- or over-award of student financial assistance. Cause: The internal control regarding review of the financial aid packaging prior to disbursement failed to detect and correct the errors. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the College refine the process of financial aid packaging to ensure the review of financial aid packaging prior to disbursement is performed at a level of detail necessary to identify clerical errors in packaging information based on review of the most recent FAFSA. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is refining the review process to include a more detailed comparison of packaging information.

2022-002 National Student Loan Data System (NSLDS) Enrollment Reporting Type of Finding ? Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Direct Loans ? CFDA 84.268 Criteria: 34 CFR 690.83(b)(2) and 34 CFR 685.309 provide regulations to institutions for the accurate and timely reporting of student enrollment information. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates. The institution should have sufficient internal controls over program compliance to report information accurately and timely. Condition: Two students that withdrew from the College were found to have status change effective dates reported to the NSLDS that were not compliant with enrollment reporting guidelines. Questioned Costs: None identified. Context: Out of a sample of 40 students with status changes, two students that withdrew were identified as having incorrect dates reported to the NSLDS. Effect: Dates reported to the Department of Education impact when students enter repayment on outstanding student loans. Incorrect dates reported to the Department of Education could cause a student to enter repayment at a time not in accordance with related regulations. Cause: For the 2021-2022 award year, the College modified its process for enrollment reporting of withdrawing students. The enrollment services department had responsibility for identifying the effective withdraw dates prior to the 2021-2022 award year. This responsibility was transferred to the student affairs department for the 2021- 2022 award year. Personnel within student affairs did not have sufficient knowledge of regulations governing the determination of effective withdraw dates for student?s with student financial assistance. The internal controls over review of the effective dates provided to the registrar?s office by student affairs were not effective at preventing or detecting and correcting the incorrectly identified effective dates. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the individual responsible for identifying effective status change dates for withdrawing students receive training on the requirements. We also recommend that a separate individual with sufficient knowledge of the reporting requirements perform a periodic and timely review of the student status change effective dates to verify the dates are in accordance with Department of Education regulations. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is identifying the appropriate resource and providing training on the regulations to those involved within the enrollment reporting process.