Audit 388712

Federal Awards Findings and Questioned Costs Finding 2025-001: Significant Deficiency - Incentive Compensation Program: Student Financial Assistance Cluster Assistance Listing Number (ALN): Various Federal Agency: U.S. Department of Education Federal Award Identification Number: Various Federal Award Year: June 30, 2025 Criteria: Regulations at 34 CFR 668.14(b)(22) specify that institutions participating in Title IV federal student aid programs are prohibited from providing any commission, bonus or other incentive payment to individuals or entities based directly or indirectly on their success in securing enrollments or financial aid. The fact that enrollment is a core responsibility does not exempt the institution. Condition/Context: One out of five employees selected for testing had a promotion letter that included a salary increase if performance metrics for enrollments were met, with goal numbers for year-over-year increases in applications, admissions, new transfer enrollment and graduate enrollment. This is not in compliance with applicable requirements regarding incentive compensation. The sample was not a statistically valid sample. Cause: The College noted that the language in the specific contract was an isolated incident and also noted there was not a process in place to ensure contracts were in compliance with the incentive compensation regulations. Effect: Violations of the ban on incentive compensation can lead to the College having to pay fines and penalties or potentially limit, suspend or terminate Title IV eligibility. Questioned Costs: Not applicable. Recommendation: The College should establish a policy where employee contracts and compensation are reviewed and approved to ensure compliance with applicable requirements regarding incentive compensation per the regulations at 34 CFR 668.14(b)(22). Management's Response: The College agrees with the finding. The College believes this was an isolated incident and verified with HR that there are no others and the President is well versed in allowable incentive compensation. The College has implemented a procedure whereby all new employee contracts are reviewed by the Treasurer before they are signed by the President and Human Resources.

Finding 2025-002: Significant Deficiency - Gramm-Leach-Bliley Act Security Policy Program: Student Financial Assistance Cluster Assistance Listing Number (ALN): Various Federal Agency: U.S. Department of Education Federal Award Identification Number: Various Federal Award Year: June 30, 2025 Criteria: The Gramm-Leach-Bliley Act (Pub. L. No. 106-102) (GLBA) requires institutions to explain their information-sharing practices to their customers and to safeguard sensitive data (16 CFR 314). In 2021, the Federal Trade Commission issued final regulations that altered the current required elements of an information security program and added several new elements. Under the regulations, institutions are required to develop, implement and maintain a comprehensive information security program that is written in one or more readily accessible parts. The written information security program for institutions must address all elements that apply. The elements for the information security programs set forth in this section 16 CFR 314.4 are high-level principles that set forth basic issues the programs must address, and do not prescribe how they will be addressed. Condition/Context: The College did not have updated procedures and processes in place specific to certain required GLBA elements. The GLBA policy review and updates are still in process. Cause: The College noted that several items required are in process or only partially completed. Effect: Failure to comply with the requirements of GLBA standards puts the College out of compliance with requirements and potentially at risk of compromising consumer, nonpublic personal information. Questioned Costs: Not applicable. Recommendation: It is recommended that the College update its written GLBA Security Policy to address all the required elements. At a minimum, the University should address each of the required minimum elements noted in the GLBA regulations (16 CFR 314.4). Management's Response: The College agrees with the finding and noted that updates to the information technology and GLBA policies is in process and expected to be completed in the fiscal year ending May 31, 2026.

Finding 2025-003: Disbursement Notifications Program: Student Financial Assistance Cluster, Federal Direct Student Loans Assistance Listing Number (ALN): 84.268 Federal Agency: U.S. Department of Education Federal Award Identification Number: P268K251441 Federal Award Year: June 30, 2025 Criteria: Title IV regulations (34 CFR 668.165 (a)) require that if a College credits a student ledger account with Direct Loan program funds the College must notify the student or parent of the anticipated date and amount of the disbursements, the student's or parent's right to cancel all or a portion of the loan and have the loan proceeds returned to the Secretary, and the procedures and time by which the student or parent must notify the College that he or she wishes to cancel the loan or loan disbursement. Condition/Context: For one student in the sample of 25 students tested, the College was unable to provide support that timely notification was provided to the student receiving Direct Loan funds. The communication should include the date and amount of disbursements and the right and process for how to cancel all or a part of the loans. The sample was not a statistically valid sample. Cause: The College noted the employee who sent the notification left the College and they were unable to locate a copy of the notification that was sent to the student. Effect: The students or parents may not have received the required regarding their Direct Loans, including the dates and amounts and process and timing for cancelling all or a portion of the loan. Questioned Costs: $2,672 in Federal Direct Student Loans ALN 84.268. Recommendation: The College should implement a policy/control to ensure that the required notifications are provided to Direct Loan students and documentation is retained. Management's Response: The College agrees with the finding. The College is implementing a process to ensure that notifications sent are immediately retained in the College’s cloud-based system. The Office of Financial Planning will conduct monthly reviews to ensure all required information has been included in the notifications. The monthly review completion will be noted in a shared document. This procedure will be implemented during the fiscal year ending May 31, 2026.