Audit 371195

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.268 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: During our testing, we noted the College did not have a formal review of their monthly reconciliations of Common Origination and Disbursement (COD) data with student account records, federal aid packaging by financial aid staff, and monitoring of the G5 system to ensure timely return of undisbursed funds after 240 days. Questioned Costs: N/A Context: The College did not have proper internal controls in place during the 2024-25 academic year to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Cause: The lack of documentation appears to stem from limited administrative capacity, particularly in the wake of operational disruptions and regulatory changes such as FAFSA Simplification. Effect: The College is not following the compliance with federal statutes, regulations, and the terms and conditions of the federal award. Repeat Finding: No Recommendation: We recommend the College review its procedures to ensure controls are in place to ensure to catch any inconsistencies that occur during the year. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.268 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. This includes the enrollment effective date and related enrollment status, which must be reported for both the Campus-Level and the Program-Level. In addition, at a minimum, schools are required to certify enrollment every 60 days, and respond within 15 days of the date that NSLDS sends a Roster file to the school or its third-party servicer. Condition: Of the 40 students selected for testing, 1 student had errors in enrollment status; the institution’s records did not match what was reported to NSLDS. Questioned Costs: N/A Context: During our testing, we noted the College did not have proper procedures in place to verify the reports sent to NSLDS are accurate. Cause: The discrepancy appears to stem from a breakdown in communication and documentation during a staffing transition in the Registrar’s Office. The intended LDA was not accurately reflected in the data reported to the Clearinghouse and subsequently to NSLDS. Effect: The NSLDS system is not updated with the correct student information, which can cause a student to not properly enter the repayment period. Repeat Finding: No Recommendation: We recommend the College review its reporting procedures to ensure the students’ statuses are accurately reported to NSLDS as required by regulations. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.038 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 674.19 states that an institution shall keep the original Perkins loan paper promissory note or original paper MPN and repayment schedules in a locked fireproof container, or if a promissory note was signed electronically, the institution must store it electronically and the promissory note must be retrievable in a coherent format. An original electronically signed MPN must be retained by the institution for 3 years after all the loans made on the MPN are satisfied. Condition: During our Perkins loan recordkeeping testing, we noted that 2 students out of 40 tested with retired or assigned loans did not have a Master Promissory Note available as support in the College’s records. Questioned Costs: N/A Context: The College was unable to locate MPNs for two students in our sample. Cause: The absence of MPNs may be due to incomplete record retention or gaps in documentation transfer during the loan retirement or assignment process. Effect: Without the MPNs, the institution may be unable to demonstrate that the loans were legally executed and agreed upon by the borrowers, which could result in delays or issues during federal assignment of Perkins loans and may impact the institution’s compliance with federal recordkeeping requirements. Repeat Finding: No Recommendation: We recommend that the College review all retired/assigned Perkins loan files to ensure MPNs are present and properly retained. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: National Science Foundation Federal Program Title: Research and Development Cluster Assistance Listing Number: 47.050 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Macalester’s policy requires that suspension and debarment checks be performed and documented before issuing payments of $25,000 or greater to ensure compliance with federal grant requirements. Condition: During our review of grant disbursements, we noted that the Grants Accountant does not have formal documentation to demonstrate that a suspension and debarment check was completed prior to making payments of $25,000 or more. Questioned Costs: N/A Context: For two of our selected transactions, the Grants Accountant could not provide documentation to support the date suspension and debarment checks were verified. Cause: The absence of formal documentation suggests that either the check was not performed or was performed but not properly documented. Effect: Failure to document suspension and debarment checks could result in noncompliance with federal regulations and institutional policy, increasing the risk of disallowed costs and potential reputational or financial consequences. Repeat Finding: No Recommendation: We recommend that the Grants Accounting team implement a control to ensure that suspension and debarment checks are both performed and formally documented prior to processing payments of $25,000 or more. Views of Responsible Officials: There is no disagreement with the audit finding.