Audit 371906

Finding 2025-001 – Procurement (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Social, Behavioral, and Economic Sciences – Passed through New York University: 47.075, Mathematical and Physical Sciences – Passed through Loyola University of Chicago: 47.049, Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. In accordance with 2 CFR sections 200.319 and 200.320(f), price quotations should be obtained from an adequate number of qualified sources for procurements that meet the small purchase procurement threshold or require documentation in support of the rationale to limit competition in those cases where competition was limited. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure the College has a procurement policy that meets the all applicable state and local laws and regulations. Questioned Costs There were no questioned costs related to this finding. Cause The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Context Two out of three vendors tested. Expenditures totaled $100,553. Effect Lack of a documented procurement policy that meets applicable state and local laws and federal regulations can result in improper procurement of goods and services which can lead to loss of future funding. Recommendation We recommend the College implement a procurement policy that conforms to federal regulations. We also recommend that the College implement policies and procedures around documentation of noncompetitive bidding. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-002 – Suspension and Debarment (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition For two out two vendors (100%) tested, the College did not provide sufficient documentation that a suspension and debarment check was performed prior to entering into a contract with the vendor. Criteria Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220 Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure suspension and debarment checks are performed and documented. Questioned Costs There were no questioned costs related to this finding. Cause The College did not have controls in place to reasonably ensure compliance with suspension and debarment requirements of the Uniform Guidance. Context Two out of two vendors tested. A subsequent check was confirmed that these vendors were not suspended or debarred. Effect If the College does not obtain documentation confirming a vendor for a procurement transaction was not suspended or debarred, the College could enter into a transaction with a suspended or debarred vendor causing unallowable costs and as a result represent noncompliance and result in a loss of federal funding. Recommendation We recommend the College review current processes for suspension and debarment to ensure that documentation is included to support the suspension and debarment check prior to entering into a contract with a vendor. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-003 – Student Financial Aid - Excess Cash (Significant Deficiency) Repeat Finding: No Federal Agency – U.S. Department of Education (ED) Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Years: Year Ended May 31, 2025 Condition During our cash management testing, we identified that Lake Forest College had excess cash for the FDL program ranging from $24,903 to $3,683,698 during the period of January 30, 2025 through February 7, 2025. In this situation, the excess cash exceeded one percent of total prior year drawdowns, and the amount was not returned within a seven-day period. Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed Title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs Questioned costs is the amount that exceeded one percent of total prior year drawdowns. Excess cash ranged from $24,903 to $3,683,698. Cause The College drew down funds in advance of the Spring semester which is allowed based on the College’s cash management method. However, due to timing differences, the funds were not ultimately disbursed to students until 8 days after the drawdown was made. Context One instance of excess cash during the fiscal year. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding. Untimely reconciliation of federal awards can result in over or under awarding of funding and result in heightened monitoring by the Department of Education. Recommendation We recommend the College review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of Responsible Officials We agree with this finding. See corrective action plan.

Finding 2025-004 – Enrollment Reporting (Significant Deficiency) Repeat Finding: No Federal Agency – U.S. Department of Education (ED) Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Direct Student Loans: 84.268 Federal Work Study Program: 84.033 Federal Supplemental Educational Opportunity Grants 84.007 Federal Award Years: Year Ended May 31, 2025 Condition For three out of forty (7.5%) student enrollment reporting selections, the student's status change at the campus level and program was not properly reported to NSLDS with the required timeframe. Criteria CFR section 685.309 and 690.83(b)(2) requires the College to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure accurate and timely enrollment reporting Questioned Costs There were no questioned costs related to testing of enrollment reporting. Cause The student's status change was after the last scheduled reporting transmission file of the semester, therefore their status change was not captured in the NSLDS reporting submission. Context Three out of forty students selected for testing. Effect Failure to report status changes accurately is noncompliance with Federal regulation and could result in heightened monitoring by the Department of Education. Recommendation We recommend the College implement review procedures to ensure that the proper effective date is being reported to the NSLDS when a student withdraws or has an enrollment status change. A system of review procedures and/or controls will ensure the College is reporting status changes accurately. Views of responsible officials We agree with this finding. See corrective action plan.