Audit 396527

Finding 2025-001 - Incentive Compensation Federal Programs: Student Financial Assistance Cluster Federal Award Numbers: 84.007, 84.033, 84.038, 84.063, 84.268 Federal Award Year: June 30, 2025 Federal Agency: U.S. Department of Education Pass-Through Entity: Not Applicable Criteria: Per 34 CFR 668.14(b)(22), 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 from the ban. Condition: During our audit, 1 out of 3 employees selected for testing received a bonus payment for achieving first year enrollment goals. The College then determined 2 employees received such bonuses and additional testing confirmed a total of 2 out of 27 employees who were involved in the College's admissions/recruiting, financial aid and registrar offices received bonuses based on their contributions towards enrollment performance. These bonuses were paid from internal College funds and not from Title IV funds. The sample was not a statistically valid sample but was determined using Chapter 21 - "Audit Sampling Considerations of Uniform Guidance Compliance Audits" of the Government Auditing Standards and Single Audit Guide. Cause: The College did not have a process for reviewing bonuses to employees to ensure they were offered in compliance with 34 CFR 668.14(b)(22). Effect: The College was not in compliance with 34 CFR 668.14(b)(22). Questioned Costs: $10,000 in bonus payments. Recommendation: We recognize that, as more fully described below, the College has since established and set in place a policy whereby incentive compensation is reviewed and approved to ensure compliance with 34 CFR 668.14(b)(22). We acknowledge this enhancement to the College’s internal control over compliance and encourage continued adherence to this policy moving forward. Views of Responsible Officials and Planned Corrective Actions: The College reviewed the finding and consulted with legal counsel and determined a formal college policy was needed. The Vice President for Finance and Assistant Vice President for Human Resources drafted a policy on incentive compensation that was reviewed and approved by senior leadership. The policy, along with a standard template for additional compensation, has been published to the human resources website for employees and managers as a resource for future awarding of compensation.