Audit 398877

Criteria or Specific Requirement – Special Tests and Provisions – Return of Title IV Funds (34 CFR 668.22(a)(1) through (a)(5) Condition – The University’s internal controls did not ensure the returns of Title IV funding were calculated correctly and resulted in improper returns. Additionally, one return was not made timely. Cause – The correct calculations were not updated in the student system to ensure the correct amounts were returned. Effect or Potential Effect – The University returned the incorrect amount of funds and did not return funds timely. Questioned Costs – ALN 84.268 – $2,730. Calculated using amounts under-returned to the Department of Education. Context – Out of the population of 179 students who withdrew, 25 were selected for testing. Our sampling method was not, and was not intended to be, statistically valid. Two students had incorrect calculations due to incorrect days completed or in the term; one return had the incorrect federal awards used and funds for one return was not made timely. Identification as a Repeat Finding, if applicable – 2024-001 Recommendation – The University should update their controls to ensure total days in the semester are calculated correctly, funds are returned in the correct order, and post-withdrawal disbursements are made correctly. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding related to Return of Title IV (R2T4) calculations and the timeliness of returns. The University recognizes the importance of accurate calculations and timely processing in compliance with federal regulations. The errors identified were primarily related to inaccuracies in determining the total number of days in the payment period and ensuring the correct data elements were consistently applied within the student information system. While corrective actions were implemented following the prior audit, management has determined that additional controls and validation procedures are necessary to ensure consistent accuracy. To address this issue, the University has implemented and will continue to implement the following corrective actions: 1. System Configuration Review and Validation – The student information system configuration for R2T4 calculations has been reviewed and updated to ensure that academic calendars, including term dates and scheduled breaks, are accurately reflected. These configurations will be validated prior to the start of each term. 2. Enhanced Calculation Review Process – A secondary review of a sample of R2T4 calculations will be performed to verify the accuracy of key inputs, including days attended, total days in the term, and applicable aid types. 3. Standardized Procedures and Checklists – The University has developed standardized procedures to ensure consistent application of federal requirements, including proper ordering of funds and treatment of post-withdrawal disbursements. 4. Timeliness Monitoring – Processes have been enhanced to track and monitor the timing of R2T4 calculations and returns to ensure compliance with required deadlines. 5. Training and Staff Development – Financial aid staff have received additional training on R2T4 requirements, with a focus on calculation components, system inputs, and regulatory updates. 6. Ongoing Quality Assurance Reviews – Periodic internal reviews will be conducted to assess compliance and identify any discrepancies for prompt correction. Management believes these enhanced controls and monitoring procedures will address the root causes of the finding and prevent recurrence.

Criteria or Specific Requirement – Cash Management – Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs (2 CFR 200.305(b)). Condition – The University drew funds in advance that were not disbursed as soon as administratively possible. Cause – The internal controls did not ensure that disbursements were reconciled prior to drawing funds. Questioned Costs – ALN 84.047A – $18,355 calculated as the amount of cumulative draws in excess of cumulative expenditures not disbursed as soon as administratively possible. Context – Out of the population of 137 draws made during the year, a sample of 14 was selected for testing. Our sampling method was not, and was not intended to be, statistically valid. One draw was not fully expended as soon as administratively possible. Effect or Potential Effect – Funds were drawn in advance and not fully disbursed as soon as administratively possible. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – The University should update their controls to ensure the time is minimized between the transfer of funds from US Treasury and disbursement by the non-federal entity. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the finding related to cash management requirements and the timing of federal fund draws and disbursements. While the University maintains a robust, multi-layered review process, enhancements are necessary to ensure full alignment with federal requirements regarding the minimization of time between the receipt and disbursement of funds. The University currently utilizes several internal controls, including: • A two-person pre-draw validation process to ensure draws align with liquidated expenses • Programmatic oversight through detailed fiscal year draw reports and reconciliation to G5 activity • Periodic fiscal year and program year reviews to identify and correct discrepancies These controls enabled the University to identify and correct the instances noted in the audit. However, management recognizes that refinements are needed to further align the timing of draws with actual cash disbursement activity. To address this, the University will implement the following corrective actions: 1. Refinement of Draw Timing – Draw requests will be more closely aligned with immediate cash needs and anticipated disbursement activity. 2. Enhanced Pre-Draw Reconciliation – In addition to existing controls, a real-time reconciliation of outstanding obligations and pending disbursements will be required prior to each draw to ensure alignment with cash needs. 3. Standardized Draw Calendar Adjustments – The University will evaluate and adjust its draw schedule, where necessary, to better align with actual disbursement cycles, including payroll and purchase card activity. 4. Formalized Monitoring and Documentation – Documentation will be maintained to support the relationship between drawdowns and disbursements, and periodic internal reviews will be conducted to ensure ongoing compliance. 5. Training and Communication – Additional guidance will be provided to program and fiscal staff regarding federal cash management requirements and expectations for timing of draws. Management believes these enhancements, in combination with existing internal controls, will ensure compliance with federal cash management requirements and prevent recurrence of this issue.