Audit 366317

Refunds of Title IV Funds Calculation and Disbursement Errors (Significant Deficiency - Special Tests and Provisions) Identification of Federal Program: Assistance Listing Number and Title: 84.063 - Federal Pell Grant Program. Cluster: Student Financial Assistance Cluster. Federal Agency: U.S. Department of Education. Federal Award Identification: P063P231905. Fiscal Year 2023-2024 (College). Criteria: Per 34 CFR § 668.164 and 34 CFR § 668.21, Title IV funds, including Pell Grant disbursements, must be made to or on behalf of eligible students within prescribed timeframes. Refunds and disbursements must occur within 14 calendar days of the date funds are credited to the student's account. Institutions must also ensure accurate reporting and reconciliation with the U.S. Department of Education's Common Origination and Disbursement (COD) system and federal payment system (G5). Condition: During the Fall 2023-2024 semester, 125 Pell Grant refund checks totaling $144,576 were issued incorrectly due to failures in the newly implemented student financial aid reporting system. Errors Identified: 1. 10 checks totaling $11,087 were cashed, with only $1,233 returned to the College. The remaining $9,854 is considered questioned costs. 2. 51 checks totaling $56,263 were cashed, and accounts were later adjusted with student cooperation. 3. 64 checks totaling $77,226 were stopped before payment. The errors were discovered approximately six weeks into the Fall 2023-2024 semester during the month of November. The new student financial aid reporting system was discontinued, the old system reinstated, and manual corrections were entered into each affected student's account. Cause: System and operational failures due to inadequate implementation of the new student financial aid reporting system: 1. Data integrity issues - Unauthorized entries and inaccurate data. 2. Communication failures - Lack of timely notifications to students. 3. Disbursement errors - Scheduled disbursement dates canceled and rescheduled. Inconsistencies with the U.S. Department of Education's COD system data. 4. Compliance date reporting errors. 5. Insufficient training on the new student financial aid reporting system. 6. Incorrect financial aid packaging, requiring manual reprocessing. Effect or Potential Effect: Pell Grant refunds were not issued within the 14-day regulatory requirement. Students received incorrect disbursement amounts. Risk of noncompliance with federal requirements for timeliness, accuracy, and reconcilation. Questioned costs totaling $9,854. Context: Total population affected: 125 refund checks totaling $144,576. Statistically valid sample tested: 37 checks, stratified across three error categories. Tested 10 cashed checks not returned, 13 cashed checks where student accounts were subsequently adjusted and 15 checks where stop payments were issued. The errors were systemic, stemming from the new student financial aid reporting system's operational rollout, and not an isolated occurence. Identification as Repeat Finding: Not identified as a repeat finding from the prior year. Recommendations: - Ensure thorough testing and validation of any new financial aid systems prior to implementation. - Implement data integrity controls to prevent unauthorized or erroneous entries. - Enhance reconciliation procedures with COD and G5 systems. - Provide comprehensive staff training before and during system transitions. - Establish monitoring to ensure disbursements meet the 14-day requirement. View of Responsible Officials' Corrective Action Plan: The following Corrective Action Plan was prepared by the management of Westchester Community College. It has not been audited and is solely the responsibility of the College. The plan is provided in response to the finding identified in the Schedule of Findings and Questioned Costs.