Audit 383697

Federal Program ALN 84.063 Federal Pell Grant Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Disbursements to or on behalf of students Significant deficiency of internal controls over compliance Criteria 34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by crediting a student's account and the total amount of all Title IV, HEA program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but— (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition found During our evaluation of compliance with these requirements, we noted one (1) instance, or one percent (1%) of the eighty (80) of the samples examined, in which the University failed to return the corresponding refund within 14 days time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. Thirty-eight (38) days passed between the date the University identified an FSA credit balance for the student and the actual refund to the student. Finding No. 2025-001 Late Refund Issuance – (continued) Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2025-001 Special Tests - Disbursements to students Student 1 1072401 $ 2,773 $ - $ - $ - $ - $ - Cause The late refund occurred due to a breakdown in follow-up procedures for accounts flagged with exceptions. Specifically, although the University identified the Federal Student Aid (FSA) credit balance, the refund was not issued in a timely manner because the account was not adequately monitored after the initial identification. Effect Failure to issue refunds within the required timeframe may cause financial hardship to students and expose the institution to non-compliance with Title IV regulations, potentially leading to penalties or corrective action from the Department of Education. Questioned cost None. The funds were returned. Context As part of our compliance tests with the disbursement requirements, we selected a sample of sixty (60) students who received a mix of Pell Grant, Direct Loans, Federal Work Study, and campus-based awards (Title IV funds), out of three thousand two hundred ninety-seven (3,297) students who received Title IV funds. From the sample of 60 students, we examined a total of 80 payments of Title IV funds. Our test disclosed one (1) instance out of 80 where the refund was not returned on a timely basis. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2024-002. Recommendation We recommend that the University enhance its follow-up procedures for student accounts where exceptions or anomalies delay the automatic issuance of refunds. Management should require documented case tracking for any account placed on hold and assign responsibility for monitoring such items until resolution. Establishing reminders or automated alerts for pending refunds can help ensure that isolated cases are not overlooked and that all refunds are processed within the 14-day regulatory timeframe. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 53-54.

Federal Program ALN 84.063 Federal Pell Grant Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Return of Title IV Funds Significant deficiency of internal controls over compliance Criteria Under 34 CFR § 668.22(j), An institution must return the amount of Title IV funds for which it is responsible under paragraph (g) as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. Finding No. 2025-002 Timely Return on Title IV Funds – (continued) Condition found In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or three percent (3%), of the sample selected which included students that received Pell and Direct loans, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2025-002 Special Tests - Timely Return of Title IV Funds Student 1 1072401 $ 396 $ - $ - $ - $ - $ - Cause The late return occurred because the Student Financial Assistance (SFA) office completed the Return of Title IV funds (R2T4) calculation on time, but the withdrawal status was not properly updated in the student information system (Ellucian/ISIS module). The discrepancy arose when the system did not flag the withdrawal as valid due to a course remaining active. This omission prevented the system from generating the cancellation payroll needed to complete the return within the 45-day timeframe. The cause reflects a systemic control gap in reconciling manual withdrawal processing with automated system updates. Effect Failure to return unearned Title IV funds within the required 45-day timeframe can result in potential financial liabilities for the institution, non-compliance penalties, and a negative impact on the institution's participation in federal financial aid programs. Questioned cost None. The funds were returned. Finding No. 2025-002 Timely Return on Title IV Funds – (continued) Context We selected a sample of forty (40) students who withdrew or had a mix of F and withdrew, and noted one (1) sample whose return was not timely reimbursed. The total amount of funds returned late was $396 out of a total of $12,250. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2024-003. Recommendation We recommend that the institution implement enhanced monitoring controls within the financial aid system to ensure that all return of Title IV funds calculations trigger the necessary flags to prompt timely returns of unearned Title IV funds. Additionally, staff should be trained in monitoring these processes to prevent further delays in compliance with federal regulations. The institution should address the deficiencies noted and review all return of Tittle IV funds processes to avoid recurrence and to ensure compliance. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 53-54.