Audit 395955

FINDING 2025-001 – Special Tests and Provisions – Return of Title IV: Significant Deficiency in Internal Control Over Compliance (SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS - SECTION III - FINDING 2025-001 FOR INCLUDED TABLE) Criteria – 34 CFR section 668.22(j): Timeframe for the return of Title IV funds. (1) An institution must return the amount of Title IV funds for which it is responsible under paragraph (g) of this section as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew as defined in paragraph (l)(3) of this section. Condition/Context – A sample of 22 students who were recipients of Title IV funding and had withdrawn or earned no credits during the year were selected and the student records were compared to the calculation of the return of Title IV funds, if any, and the federal government’s Common Origination and Disbursement system. The sample was not statistically valid. Of the 22 students selected, funds were not returned within the required 45 days following the University’s date of determination for 1 student, 2 students were not identified as withdrawn within the required 30 days following the end of the term, and returned funds for 2 students were incorrectly calculated. Effect – If controls are not in place and operating correctly, the University of San Diego may not accurately or timely return the required Title IV funds to the federal government. Cause – For the exceptions identified, the Title IV funds were not returned within the required time frame due to gaps in the lines of communication between departments in certain situations where there was a change in status. Incorrect calculations of funds to be returned were a result of an incorrectly calculated number of days in the Spring term. Repeat Finding – Yes, see 2024-001. Recommendation – We recommend the University of San Diego revise its process to ensure all changes in status are communicated to the office of financial aid to be processed for return of Title IV, if applicable. We also recommend a policy be established requiring someone other than the calculation’s preparer review the calculated number of days in the term used in the return calculations. Views of Responsible Officials– Management concurs with this finding and has established new reporting mechanism within its weekly processes to monitor student withdrawals.

FINDING 2025-002 –Eligibility: Material Weakness in Internal Control Over Compliance (SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS - SECTION III - FINDING 2025-002 FOR INCLUDED TABLE) Criteria – 34 CFR section 668.32(d): A student is eligible to receive Title IV, HEA program assistance if the student either meets all of the requirements in paragraphs (a) through (m) of this section or meets the requirement in paragraph (n) of this section as follows: (d) Satisfies the citizenship and residency requirements contained in § 668.33 and subpart I of this part. 34 CFR section 668.33: Except as provided in paragraph (b) of this section, to be eligible to receive title IV, HEA program assistance, a student must—(1) Be a citizen or national of the United States; or (2) Provide evidence from the U.S. Immigration and Naturalization Service that he or she— (i) Is a permanent resident of the United States; or (ii) Is in the United States for other than a temporary purpose with the intention of becoming a citizen or permanent resident. Condition/Context – A sample of 70 students who were recipients of Title IV funding during the year were selected and the student records were compared student eligibility supporting documentation, disbursement documentation and FAFSA records. One student was identified during our testing whom was ineligible to receive Title IV funding as a result of their citizenship status. Upon further investigation by management, it was determined a total of 7 students had been awarded and disbursed Title IV funds during the year which were ineligible due to citizenship status. The total disbursed was determined to be $297,078 which was subsequently returned to the federal government. Effect – Students were disbursed funds when they were ineligible to receive such funds. Cause – The C-flag notifications within the student financial aid system for the law school was not properly set up at the start of the year and accordingly, certain C-flags, namely those related to citizenship were not relayed to the student aid processors within the law school. Repeat Finding – No Recommendation – We recommend the University of San Diego implement a process to monitor the system setup and evaluate it for proper functionality prior to when students are processed. Views of Responsible Officials– Management concurs with this finding and has established a new process by which there will be secondary verification of the student system setup completed annually.

FINDING 2025-003 – Equipment Management: Significant Deficiency in Internal Control Over Compliance (SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS - SECTION III - FINDING 2025-003 FOR INCLUDED TABLE) Criteria – 2 CFR section 200.313(d)2: A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. Condition/Context – During our audit we requested the results of the most recent physical inventory of federally purchases equipment. The most recent physical inventory had been completed during the fiscal year ending June 30, 2020. Effect – Management may not have full knowledge of the current location, existence and condition of federally purchased equipment. Cause – University of San Diego does not currently have a protocol in place to initiate the physical inventory on the required basis. Repeat Finding – No. Recommendation – We recommend the University of San Diego implement a process to trigger the process of a physical inventory of equipment every other year. Views of Responsible Officials– Management concurs with this finding and has established new responsibilities at individual employee levels to allow for additional oversight over the process. The process of completing the inventory has also been added to the annual fiscal close process documentation.