Audit 402115

Finding 2025-001 – Incorrect student status Student Financial Assistance Cluster (ALNs: 84.063 and 84.268) Compliance Requirement: Eligibility Criteria - Federal regulations governing the Student Financial Assistance (SFA) programs require institutions to accurately determine and document student eligibility, including enrollment status, prior to disbursement of federal financial aid. Condition - During testing of six student academic files selected for compliance with eligibility requirements, we identified three instances (50%) in which student status was incorrectly reported and/or not supported by appropriate documentation. Student enrollment status was not recorded within the National Student Loan Data System (NSLDS) to match supporting academic records from the school’s academic system (e.g., registrar documentation or transcripts) Cause - The condition was primarily attributable to staff turnover associated with the closure/termination of the Lawrence Memorial Hospital School of Nursing, which resulted in loss of personnel responsible for maintaining and verifying student eligibility information and disruption in established processes for updating and reviewing enrollment status. As a result, key eligibility determination and review controls were not performed consistently during the period under audit. Effect - The System is at risk of disbursing federal funds to ineligible students or awarding incorrect amounts. There is also an increased likelihood of noncompliance with federal eligibility requirements. In addition, absence of effective controls increases the risk that errors will not be detected or prevented on a timely basis. We did not quantify questioned costs for these exceptions; however, due to the nature of the errors, questioned costs may exist and could be material when extrapolated to the population. Recommendation - We recommend that management strengthen internal controls over eligibility determination and student status reporting by: • Implementing formal procedures to ensure student enrollment status is accurately recorded and timely updated, • Establishing a secondary review control over eligibility determinations prior to aid disbursement, • Developing transition/contingency procedures to maintain control effectiveness during periods of staffing changes or organizational disruption, and • Correcting any incorrect student status identified within NSLDS timely. Views of Responsible Officials and Planned Corrective Action - See Corrective Action Plan