Audit 377334

Finding 2025-002 – Return of Title IV Funds Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant: 84.063 Federal Award Year 2024-2025 Award Number: P063P Condition For one out of forty students tested, City Colleges properly recalculated a return of Title IV funds for a student but did not subsequently adjust the student's account to perform the return or notify the student of the adjusted award amount. Criteria Per 34 CFR 668.22, the institution must return, the lesser of—(i) The total amount of unearned title IV assistance to be returned as calculated or an amount equal to the total institutional charges incurred by the student for the payment period or period of enrollment multiplied by the percentage of title IV grant or loan assistance that has not been earned by the student. An institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that returns are properly adjusted to students' accounts to ensure funds are returned to the Department of Education timely. Questioned Costs Actual questioned costs total $1,192. Based on our sample results, estimated likely questioned costs total $123,879. Cause The lack of return of Title IV funds was an oversight due to human error. Context Infrequent. One out of forty students (2.5%) selected for testing. Effect Failure to return funds to the Department of Education can result in excess cash or loss of future funding. Recommendation We recommend City Colleges enhance monitoring procedures to ensure that returns of federal funds are completed after return of Title IV calculations are performed. Views of responsible officials We agree with this finding. See corrective action plan.

Finding 2025-001 – Direct Loan Disbursement Notifications Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Year 2024-2025 Award Number: P268K Condition During our testing over direct loan disbursement notifications, we found that for twenty out of twenty students tested, City Colleges could not provide evidence that notifications were sent within the required timeframe informing the student, or parent, that a credit will be made to the student’s account for a direct loan disbursement. While City Colleges demonstrated that its system was configured to automatically send notification letters and confirmed that notifications were issued, City Colleges could not provide documentation showing the specific date each notification was sent in relation to the loan disbursement. Criteria 34 CFR 668.165 requires institutions who credit a student's account with a direct loan disbursement must notify the student, or parent, in writing of the (1) the date and amount of the disbursement; (2) the student's right, or parent's right, to cancel all or a portion of that loan or loan disbursement and have the proceeds returned..; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure there is a sufficient audit trail of direct loan disbursement notifications. Questioned Costs None. Cause City Colleges’ system is designed to record the date notifications are sent to students; however, it does not retain a copy of the actual notification content that was transmitted. Context Frequent. Twenty out of twenty students (100%) selected for testing. Effect Failure to maintain documentation of the notifications sent to students regarding their direct loan disbursements may prevent students from exercising their right to cancel awards within the allowable timeframe. This constitutes noncompliance with federal regulations and could jeopardize City Colleges’ eligibility for future funding. Recommendation We recommend City Colleges enhance its system to retain both the date of the notification and a copy of the actual notification sent to students. Views of responsible officials We agree with this finding. See corrective action plan.

Finding 2025-003 – Reporting Repeat Finding: No Federal Program Title – U.S. Department of Education Higher Education Institutional Aid 84.031C Federal Award Year 2024-2025 Award Number: 21061-210822-1-HWC Pass-Through Entity: Northeastern Illinois University Condition For one of the four reports tested for the Higher Education Institutional Aid Program, City Colleges did not timely submit a quarterly report to the Pass-Through Entity (PTE). A quarterly performance report was due on May 1, 2025 and submitted 14 days late on May 15, 2025. Criteria Per the terms of the PTE's annual Subaward Agreement, City Colleges is required to submit quarterly reports along with annual performance reports. Quarterly reports are required to be submitted within 30 days of the period end. 2 CFR Section 200.303 requires 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 in place to ensure timely reporting of required performance reports. Questioned Costs There were no questioned costs related to testing of reporting. Cause Submission delay was the result of poor time management and breakdowns in communication between PIs and the grantor. Context Frequent. One out of four reports (25%) selected for testing. Effect Failure to submit reports timely is noncompliance with the requirements of the grant award and could result in loss of funding or other penalties. Recommendation We recommend City Colleges implement monitoring procedures to ensure that reports are submitted in a timely manner. Views of responsible officials We agree with this finding. See corrective action plan.