Audit 384632

DEPARTMENT OF EDUCATION- Student Financial Aid Cluster MATERIAL WEAKNESS (MW) FINDING 2025-001: Special Tests and Provisions – Return to Title IV Funds Criteria: Federal regulation 34 CFR § 668.22 states that when a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student's withdrawal date. Specific requirements include: • Calendar Days: Per 34 CFR § 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. • Calculation of the amount of title IV assistance earned by the student: Per 34 CFR § 668.22(e)(4), the unearned amount of title IV assistance to be returned is calculated by subtracting the amount of title IV assistance earned by the student as calculated under paragraph (e)(1) of this section from the amount of title IV aid that was disbursed to the student as of the date of the institution's determination that the student withdrew. • Withdrawal Date/Last Date of Attendance: Per 34 CFR § 668.22(c) and (l)(3)(i), the withdrawal date must be determined in accordance with the type of withdrawal and must reflect the student’s actual last date of attendance at an academically related activity, as documented by the institution. Condition: In a sample of twenty-five (25) students, systematically selected, subject to Return of Title IV (R2T4) requirements, we identified 6 instances where the R2T4 calculation was performed incorrectly. Specifically: • Three (3) instances involved using an incorrect total number of calendar days in the period of enrollment or payment period. • Two (2) instances involved using the incorrect Pell grant disbursed amount in the calculation. • One (1) instance involved using an incorrect withdrawal date/last date of attendance. The institution provided supporting documentation as evidence that corrections were made prior to the issuance of our report. The findings revealed a material weakness over compliance related to R2T4 requirements. Based on the number of findings, and inquiry and management assertion, we determined that the findings were pervasive to the R2T4 population and it was determined that expanding that sample would not be necessary. Management reviewed the entirety of the population and reperformed the R2T4 calculations, as appropriate. Supporting documentation was provided. Cause: The staff member previously responsible for performing R2T4 calculations retired, and the responsibility was assigned to a new employee with limited knowledge of the applicable regulations. A review process was not in place to ensure the accuracy of the calculations, which resulted in errors not being identified until they were brought to management’s attention by the auditors. Effect: As a result of the errors identified in the R2T4 calculations, the institution did not accurately determine the amount of Title IV funds earned and unearned for the affected students. The known questioned cost associated with these errors total $1,807 representing amounts of overpayment to students. Additionally, due to incorrect calculations there were underpayments to students in the amount of $1,694. Recommendation to prevent future occurrences of the deficiency identified. We recommend that the institution strengthen its controls over the R2T4 calculation process by: 1. Providing comprehensive training to staff responsible for performing R2T4 calculations to ensure understanding of regulatory requirements. 2. Implementing a formal review process whereby a second qualified individual reviews and approves all R2T4 calculations before finalization. 3. Establishing written procedures and checklists to ensure the correct number of calendar days, Pell Grant disbursement amounts, and withdrawal dates are consistently and accurately applied. 4. Periodically monitoring compliance with these procedures to identify and correct errors in a timely manner.

DEPARTMENT OF EDUCATION- Student Financial Aid Cluster COMPLIANCE FINDING 2025-002 Special Tests and Provisions – Disbursements to or on behalf of Students Criteria: Federal regulation 34 CFR §668.164(l) states: (1) Notwithstanding any State law (such as a law that allows funds to escheat to the State), an institution must return to the Secretary any title IV, HEA program funds, except FWS program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the Federal portion of the payroll disbursement. (2) If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Secretary before the end of this 45-day period. (3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued the check. Condition: In a sample of twenty-five (25) title IV outstanding checks, systematically selected, we found five instances where uncashed title IV checks were not returned to the Department of Education within 240 days from the issuance of the check. The institution provided supporting documentation as evidence that the required funds were sent back to the Department of Education through the G5 system prior to the issuance of our report. Management reviewed the entirety of the population and all uncashed title IV checks were refunded through the G5 system. Supporting documentation was provided. Cause: The process of evaluating outstanding checks was not performed in a timely fashion. This process should have been done at least quarterly. With staff turnover and new position appointments, this process was omitted. It was on the radar of the Business Office staff, but time did not permit the completion of this process. Effect: The institution did not return uncashed title IV checks timely to the Department of Education as required. Recommendation to prevent future occurrences of the deficiency identified: The institution should strengthen its controls over the monitoring and timely return of unclaimed Title IV credit balance checks to ensure compliance with 34 CFR §668.164(l). Specifically, management should implement and document procedures to: 1. Track all Title IV disbursements issued by check, including the issuance date and applicable return deadlines. 2. Perform periodic (at least monthly) reviews of outstanding Title IV checks to identify uncashed items approaching the 240-day return requirement. 3. Ensure uncashed Title IV checks are returned to the U.S. Department of Education within 240 days of issuance when checks are not cashed or otherwise negotiated. 4. Assign clear responsibility for monitoring outstanding checks and returning funds and provide training to staff involved in Title IV disbursement and reconciliation processes. 5. Retain documentation evidencing timely monitoring, review, and return of Title IV funds to support compliance and audit review. Views of Responsible Officials and Planned Corrective Actions – See Corrective Action Plan