Finding No.: 2023-005 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $61,291 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions: 1. For one (or 9%) of eleven items, aggregating $74,721 of $359,456 in total non-payroll expenditures, no supporting documentation was provided to substantiate how the allocated amount charged to the program was determined and how the expenditure (PO# 23-PO- 1856 ; $35,492) directly relates to the purpose of the underlying subgrant. 2. For thirty-one (or 63%) of forty-nine items, aggregating $64,266 of $1,612,427 in total payroll expenditures, we noted the following: Item #s 1 through 6 relate to employee’s salaries and wages and related fringe benefits (employer contributions for social security and health insurance) allocated and charged to federal grant for which we noted either a) the hours paid is higher compared to the hours recorded on the approved timesheet or b) the rate paid is higher compared to the rate per contract. Item #s 7 through 14 relate to salaries – overload or adjunct that were not supported by adequate documentation (i.e. semester section offering or instructor’s schedule) to ascertain whether service was received. For item #15, we noted that the rate paid is higher compared to the rate per contract. Furthermore, the related salaries – overload was not supported by adequate documentation (i.e. semester section offering/instructor’s schedule) to ascertain whether service was received. For item #s 16 through 31, there were no approved timesheet on file to substantiate the actual number of hours worked. Further, for item #s 29 through 31, approval of the amount paid to employees relating to leave was not on file. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $61,291 based on the items identified in Conditions above. For condition #2, item #s 4 through 6, 13 through 14, and 20 through 31, questioned costs related to federal expenditures that may result from discrepancies noted or unestablished allocation are not determinable. Identification as a Repeat Finding: 2022-008 and 2022-009 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-006 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: Non-federal entities other than states must follow Sections 200.313(c) through (e) of the Uniform Guidance. Section 200.313(d) states that procedures for managing equipment, whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property; b. A physical inventory of the property must be carried out and the results reconciled with the property records at least once every two years; c. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; d. Adequate maintenance procedures must be developed to keep the property in good condition; and e. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: Capital assets records do not meet the criteria above and are not effectively maintained since updates to the records occur only once a year. Specifically, we noted the following: 1. No capital assets record was provided. 2. An inventory of capital assets has been performed on an annual basis; however, the result of the physical inventory was not completely reflected/reconciled with the property records. 3. As capital assets records are not effectively maintained, it does not appear that the College has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. 4. Long-lived assets are not routinely evaluated for possible impairment. We are unable to assess the overall cumulative monetary value of the noncompliance. However, the table below summarizes total capital outlays over the past five years: Cause: The College lacks adequate internal control policies and procedures over compliance with applicable federal property rules and regulations and lacks effective procedures governing property maintenance, as well as periodic assessment of asset impairment conditions. Moreover, internal control policies and procedures requiring periodic and timely performance and independent review of capital assets reconciliations and related general ledger accounts are not effectively implemented. Effect: The College is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, that may result from inadequate property records, maintenance procedures, and the absence of timely reconciliations are not determinable. Identification as a Repeat Finding: 2022-010 Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on equipment and real property management. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-007 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Period of Performance Questioned Costs: $9,883 Criteria: The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. For one (or 4%) of twenty-three items, aggregating $45,931 of $75,337 in total non-payroll expenditures, the item amounting to $1,209 (Check # 1039088; PO# 22-PO-2614) was incurred prior to the funding period stipulated in the grant awards. 2. For twenty (or 54%) of thirty-seven items, aggregating $20,993 of $121,401 in total payroll expenditures, the following costs of salaries charged to the program were incurred prior to the funding period stipulated in the grant awards: Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to period of performance. Effect: The College is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $9,883 based on the items identified in Conditions above. For item #s 10 through 20, only $2,246 is included in the total questioned costs, which relates to costs incurred prior to the funding period stipulated in the grant awards. Identification as a Repeat Finding: 2022-011 Recommendation: College management should improve internal control policies and strengthen controls to comply with applicable period of performance requirements. Specifically, review should be made to ensure all costs charged to the program are within the funding period stipulated in the grant awards. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-008 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Procurement and Suspension and Debarment Questioned Costs: $66,667 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.320(a) states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For six (or 50%) of twelve items, aggregating $157,536 in total non-payroll expenditures, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method, as follows: For item #s 1 through 3, there were no vendor quotations on file. For item #s 4 and 6, procurement was sole sourced with written justification but does not appear to be justified. For item # 5, there were no adequate vendor quotations on file. Additionally, the College has no formal policies and procedures over compliance with the requirement of 2 CFR 200.320 which requires that the College distribute micro-purchases equitably among qualified suppliers. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; and 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The College is in noncompliance with applicable procurement requirements. The reportable questioned cost is $66,667 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-012 Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; and 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-009 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $745,189 Criteria: In accordance with applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant statutory provisions and consistent with the purpose of the ESF “to prevent, prepare for, and respond to coronavirus”. Allowable expenditures incurred and liquidated prior to December 27, 2020 must have been “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus”. Further, beginning December 27, 2020, any unused HEERF I Institutional Portion funds, new HEERF II Institutional Portion funds and HEERF III Institutional Portion Funds, may be used to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll) and to make additional financial grants to students. HEERF I and HEERF II funds may also have been used to carry out student support activities authorized by the Higher Education Act (HEA) that address needs related to coronavirus. HEERF Frequently Asked Questions (FAQ) Rollup Document dated October 14, 2020 states that: • Question #38: Institutions can use CARES Act funds under Section 18004(a)(2) to make scholarships to students. Section 18004(a)(2) of the CARES Act state that institutions may use funds specifically “for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the HEA), including food, housing, course materials, technology, health care, and child care”. • Question #47: Institution may use funds from the Institutional Portion of its section 18004(a)(1) allocation to purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning as such costs are associated with a significant change in the delivery of instruction due to the coronavirus. An institution may also use Institutional Portion funds for any other costs for computer system upgrades that are reasonably related to “significant changes to the delivery of instruction due to the coronavirus.” This would not include, for example, previously planned upgrades to computer systems. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For four items (or 33%) of twelve items, aggregating $1,085,985 of $1,184,585 in total non-payroll expenditures, we noted the following: Item #s 1 and 2 were not supported by adequate documentation (i.e. justification of the purpose prior to purchase and receiving reports) to ascertain whether such expenditure is associated to distance learning due to coronavirus. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Item # 3 pertains to relinquishment of student’s outstanding debt with the College, whereas the College directly credited student’s accounts and got reimbursement from the CARES Act funds under Section 18004(a)(2). These are not associated with coronavirus. There is no evidence of communication or consultation with the grantor agency that these expenditures are allowable. Item # 4 is standard recurring cost and not associated with coronavirus. Specifically, expenditure relates to annual software subscription of the College. There is no evidence of communication or consultation with the grantor agency that this expenditure is allowable. Cause: The College lacks adequate internal controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: The College is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $745,189 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-019 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-010 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Cash Management Questioned Costs: Undeterminable Criteria: 2 CFR section 200.302(b)(6) states that the recipient must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, per OMB Compliance Supplement May 2023, Student Aid (ALN 84.425E) should be disbursed within 15 calendar days of the drawdown from ED’s grant management system (G5), while Institutional Aid Portion, (a)(2), and (a)(3) funds (all other ALNs) should be disbursed within 3 calendar days of the drawdown from G5. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, monitoring of actual disbursements of the following drawdowns during the year was not performed: Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is in noncompliance with applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Identification as a Repeat Finding: 2022-021 Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-011 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 Area: Procurement and Suspension and Debarment Questioned Costs: $179,015 Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, RepMar authorizes the College to use its own procedures for procurement provided they meet the RepMar Procurement Code. RepMar’s Procurement Code states the following: (a) Section 126.7 - Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous to the Government taking into consideration price and the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made. (b) Section 127 - Procurement of goods and services not exceeding $25,000 may be made in accordance with small purchase procedures promulgated by RepMar’s Policy Office. Small purchase procedures are those relatively simple and informal methods for securing services, supplies, or other property that do not cost more than $25,000. RepMar’s Ministry of Finance has previously declared that if small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (c) Section 128 - a contract may be awarded for supply, service, or construction item without competition when it is determined in writing that there is only one source for the required supply, service, or construction item. (d) Section 129 - Notwithstanding any other provision of this Chapter, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or authorize others to make emergency procurement when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations promulgated by the Policy Office; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. 2 CFR 200.319 states that: (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. (c) (6) Examples of situations that may restrict competition include specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement. (d) (2) The recipient or subrecipient must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the property, equipment, or service being procured. The description may include a statement of the qualitative nature of the property, equipment, or service to be procured. When necessary, the description must provide minimum essential characteristics and standards to which the property, equipment, or service must conform. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to clearly and accurately describe the technical requirements, a “brand name or equivalent” description of features may be used to provide procurement requirements. The specific features of the named brand must be clearly stated. 2 CFR 200.320(a) states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. 2 CFR 200.320(c) states that there are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. 2 CFR 200.324(a) states that the recipient or subrecipient must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: Of four items (or 100%), aggregating $179,015 in total non-payroll expenditures, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method, as follows: For item #s 1 through 3, there were no vendor quotations on file. Further for item #s 2 and 3, there was no documentation on file to support compliance with 2 CFR 200.324(a). For item #4, procurement did not provide full and open competition in the solicitation process. The solicitation specified particular models, including a requirement for a specific “brand name” product instead of allowing “an equal” product to be offered. Furthermore, for solicitation with brand name indicated, solicitation did not include “brand name or equivalent” description. In addition, the selected vendor was not among the vendors who provided quotations. Additionally, the College has no formal policies and procedures over compliance with the requirement of 2 CFR 200.320 which requires that the College distribute micro-purchases equitably among qualified suppliers. Moreover, the College has no internal control policies and procedures over verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Furthermore, the College lacks internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; and 3) performance of a cost or price analysis for every procurement transaction in excess of the simplified acquisition threshold. Effect: The College is in noncompliance with applicable procurement requirements. The reportable questioned cost is $179,015 based on the items identified in Condition above. Identification as a Repeat Finding: 2022-022 Recommendation: Responsible personnel should ensure that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Furthermore, the College should establish internal control policies and procedures over: 1) distribution of micro-purchases equitably among qualified suppliers; 2) verification that an entity with which the College plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded; and 3) performance of a cost or price analysis for every procurement transaction in excess of the simplified acquisition threshold. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-012 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Reporting Questioned Costs: $0 Criteria: The CARES Act 18004(e) and the CRRSAA 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. In accordance with applicable reporting requirements, the College is required to submit HEERF I, II, & III Annual Performance Report Form (PRA Number 1840-0850) with the following key line items: Question 5: Institutions were required to prioritize exceptional need in awarding emergency financial aid grants to students. Documentation must show methodology for distributing aid that prioritizes exceptional need. Question 9b, row 13: “Implementing evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines” and row 14: “Conducting direct outreach to financial aid applicants.” Spending under these categories indicates whether an institution has spent funds under a required use of funds established under the ARP. If an institution indicates zero-dollar amount spending for either or both categories, examine earlier annual reports to determine the institution had spending at some point on these two funding categories consistent with American Rescue Plan Act (ARP) FAQ Question 21. Additionally, the College is required to submit Quarterly Budget and Expenditure Reporting for all HEERF I, II, and III grant funds (PRA Number 1840-0849). The quarterly portion reporting requirements involve publicly posting completed forms conspicuously on the institution’s website. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Total annual expenditures per the Annual Report Data Collection System differ from cumulative expenditures from 01/01/22 through 12/31/22 per underlying accounting records, as follows: 2. ALN 84.425F COVID-19 HEERF-Institutional Portion ALN 84.425L COVID-19 HEERF-Minority Serving Institution Quarterly Budget and Expenditure reports were publicly posted beyond the 10-day posting requirement after the end of each calendar quarter as follows: Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the criteria above. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Identification as a Repeat Finding: 2022-023 Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with applicable reporting requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-013 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Cash Management Questioned Costs: Undeterminable Criteria: The College’s Program Participation Agreement indicates that the College is placed on the Heightened Cash Monitoring (HCM) payment method. Based on U.S. Department of Education (ED)’s publication, the College is placed on HCM1 payment method for the quarters ended March 1, 2023, June 1, 2023, and September 1, 2023. Under the HCM payment method, an institution must credit a student’s account for the amount of Title IV funds the student is eligible to receive and pay the amount of any credit balance due before the institution submits a request for funds or seeks reimbursement. Under HCM1, after making a disbursement to eligible students from institutional funds and submitting disbursement records to the Common Origination and Disbursement (COD) system, the institution draws down funds to cover those disbursements through G5 the same way as an institution on the Advance Payment Method. Due to the effects of the COVID-19 pandemic, in a December 2020 Federal Register Notice, ED permitted institutions on the HCM1 payment method to submit a request for funds without first paying credit balances due, as long as the institution pays the credit balances no later than three calendar days after receiving the funds for those students. 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, no detailed listing of expenditures supporting the following drawdowns during the year was on file to ascertain whether the expenditures were paid prior to the date of request for fund: Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is in noncompliance with applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-014 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Reporting Questioned Costs: $0 Criteria: The College is required to submit origination records and disbursement records to the Common Origination and Disbursement (COD) system. Key items on origination records, if applicable, are: Social Security number, award amount, enrollment date, verification status code (when the applicant is selected for verification), transaction number, cost of attendance, and the “Academic Start Date” and “Academic End Date”. Key items on disbursement records are disbursement date and amount. Conditions: 1. For twenty-four (or 60%) of forty items tested, the cost of attendance reflected in the Origination Records is the cost of attendance for full-time students, even if the student’s enrollment status is three-quarters time, half time or less than half time. 2. For eighteen (or 45%) of forty items tested, the award amount reflected in the Origination Records do not agree with the award amount per Payment and Disbursement Schedules. Cause: The College lacks adequate internal controls over compliance with applicable federal regulations related to reporting, specifically the systematic review and updating of financial aid records. Effect: The College is in noncompliance with applicable reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Recommendation: College management should establish a systematic process for reviewing and updating the origination records prior to and/or after submission to COD system. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-015 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Verification Questioned Costs: $8,619 Criteria: 34 CFR 668.53 states that: (a) An institution must establish and use written policies and procedures for verifying an applicant’s Free Application for Federal Student Aid (FAFSA) information in accordance with the provisions of this subpart. These policies and procedures must include: (1) The time period within which an applicant must provide any documentation requested by the institution in accordance with 34 CFR 668.57; (2) The consequences of an applicant’s failure to provide the requested documentation within the specified time period; (3) The method by which the institution notifies an applicant of the results of its verification if, as a result of verification, the applicant’s Expected Family Contribution (EFC) changes and results in a change in the amount of the applicant’s assistance under the title IV, HEA programs; (4) The procedures the institution will follow itself or the procedures the institution will require an applicant to follow to correct FAFSA information determined to be in error; and (5) The procedures for making referrals under 34 CFR 668.16(g). (b) An institution’s procedures must provide that it will furnish, in a timely manner, to each applicant whose FAFSA information is selected for verification a clear explanation of: (1) The documentation needed to satisfy the verification requirements; and (2) The applicant’s responsibilities with respect to the verification of FAFSA information, including the deadlines for completing any actions required under this subpart and the consequences of failing to complete any required action. (c) An institution’s procedures must provide that an applicant whose FAFSA information is selected for verification is required to complete verification before the institution exercises any authority under section 479A(a) of the HEA to make changes to the applicant’s cost of attendance or to the values of the data items required to calculate the EFC. 34 CFR 668.54(a); FSA Handbook Application and Verification Guide, Chapter 4 requires an institution to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information for those applicants selected for verification by ED. Institutions shall require each applicant whose application is selected by ED to verify information required for the Verification Tracking Group to which the applicant is assigned. Conditions: 1. The College’s policies and procedures for verifying an applicant’s FAFSA information do not include all of the requirements identified in the Criteria above. 2. For 2 (or 18%) of 11 participants tested, discrepancies in the information were found between the supporting documents and related verification worksheet provided against the information reflected in the student’s Institutional Student Information Record (ISIR). Cause: The College did not effectively monitor compliance with applicable verification requirements. Effect: The College is in noncompliance with applicable special tests and provisions for verification requirements. The reportable questioned cost is $8,619 based on the items identified in Conditions above. Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on verification requirements. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan .
Finding No.: 2023-016 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions – Disbursements to or on Behalf of Students Questioned Costs: $145,861 Criteria: 34 CFR 668.165(a)(1) states that before an institution disburses title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each title IV, HEA program, and how and when those funds will be disbursed. 34 CFR 668.164(d)(1) states that an institution makes a direct payment: (i) To a student, for the amount of the title IV, HEA program funds that a student is eligible to receive by: (A) Initiating an EFT of that amount to the student’s financial account; (B) Issuing a check for that amount payable to, and requiring the endorsement of, the student; or (C) Dispensing cash for which the institution obtains a receipt signed by the student. 34 CFR 668.164(d)(2) states that an institution issues a check on the date that it: (i) Mails the check to the student or parent; or (ii) Notifies the student or parent that the check is available for immediate pick-up at a specified location at the institution. The institution may hold the check for no longer than 21 days after the date it notifies the student or parent. If the student or parent does not pick up the check, the institution must immediately mail the check to the student or parent, pay the student or parent directly by other means, or return the funds to the appropriate title IV, HEA program. 34 CFR 668.164(h) states that: (1) A title IV, HEA credit balance occurs whenever the amount of title IV, HEA program funds credited to a student’s ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. (2) A title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but no later than: (i) Fourteen (14) days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (ii) Fourteen (14) days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. 34 CFR 690.61(a)(1) states that an institution must disburse a Federal Pell Grant to an eligible student who is otherwise qualified to receive that disbursement and electronically transmit Federal Pell Grant disbursement data to the Secretary for that student if: (i) The student submits a valid SAR to the institution; or (ii) The institution obtains a valid ISIR for the student. 34 CFR 690.61(b) states that for a student to receive a Federal Pell Grant for an award year, the student must submit the relevant parts of the valid SAR to his or her institution or the institution must obtain a valid ISIR by the earlier of: (1) The last date that the student is still enrolled and eligible for payment at that institution; or (2) By the deadline date established by the Secretary through publication of a notice in the Federal Register. Conditions: 1. For sixty (or 100%) students tested, the College provided students with an award letter for the whole academic year which is based on full time enrollment. However, prior to disbursements, students were not notified of the final amount of funds that the student or his or her parent can expect to receive under title IV, and how and when those funds will be disbursed. 2. For thirty-eight (or 63%) of sixty students tested, the College did not pay the credit balance directly to the student or parent within the 14-day timeframe. 3. For five (or 8%) of sixty students tested, the College received a valid ISIR subsequent to the earlier of a) the student’s last date of enrollment; or b) the deadline date established by the Secretary through publication of a notice in the Federal Register. Cause: The College lacks adequate internal controls over compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Effect: The College is in noncompliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. The reportable questioned cost is $145,861 based on the items identified in Conditions above. Recommendation: College management should improve internal control policies and procedures requiring compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Specifically, the College should implement a comprehensive communication strategy to ensure that all students receive clear and timely notifications regarding their Title IV funds. In addition, the College should establish a monitoring system to ensure that credit balances are disbursed within the 14-day timeframe to maintain compliance with federal regulations. Lastly, the College should strengthen internal control policies and procedures in obtaining students’ valid ISIR on a timely manner. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-017 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Enrollment Reporting Questioned Costs: $0 Criteria: The College is required to report enrollment information under the Pell grant via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). Per NSLDS Enrollment Reporting Guide February 2026, schools are quired to report details about: 1) The Student – Name, Social Security Number, address, email address, and phone number. 2) The Campus-Level Enrollment for the student – Data related to the student’s overall enrollment at your campus, including Enrollment Status and Effective Date, Anticipated Completion Date, and Certification Date. 3) The Program(s) of Attendance for the student – Classification of Instructional Programs (CIP) code, CIP Year, Program Credential Level, Program Length, Program Enrollment Status, and other data about the program. 34 CFR 690.83(b)(2) states that an institution shall submit, in accordance with deadline dates established by the Secretary, through publication in the Federal Register, other reports and information the Secretary requires and shall comply with the procedures the Secretary finds necessary to ensure that the reports are correct. Institutions are responsible for timely reporting, whether they report directly or via a third-party servicer. Institutions must complete and return within 15 days the Enrollment Reporting roster file placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS. An institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in the data elements for the Campus Record and the Program Record identified above, and submit the changes electronically through the batch method, spreadsheet submittal, or the NSLDS website. Condition: The College did not report the enrollment information under the Pell grant via the NSLDS. Cause: The College lacked established internal control policies and procedures over notification to ED and updating NSLDS of changes in student status in a timely and accurate manner. Effect: The College is in noncompliance with applicable special tests and provisions for enrollment reporting requirements. No questioned costs are presented as the finding relates to the reporting compliance requirement. Recommendation: College management should establish internal control policies and procedures requiring compliance with applicable federal regulations on notifying ED and updating NSLDS of changes in student status in a timely and accurate manner. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2023-018 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions - Gramm-Leach-Bliley Act-Student Information Security Questioned Costs: Undeterminable Criteria: 16 CFR 314.1 implements sections 501 and 505(b)(2) of the Gramm-Leach-Bliley Act (GLBA), which sets forth standards for developing, implementing, and maintaining reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information. 16 CFR 314.3 requires institution to develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to its size and complexity, the nature and scope of its activities, and the sensitivity of any customer information at issue. The information security program shall include the elements set forth in 16 CFR 314.4 and shall be reasonably designed to achieve the objectives of this part. 16 CFR 314.4 states that in order to develop, implement, and maintain institution’s information security program, the institution shall: (a) Designate a qualified individual responsible for overseeing and implementing information security program and enforcing information security program. (b) Base its information security program on a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, and assesses the sufficiency of any safeguards in place to control these risks. (c) Design and implement safeguards to control the risks it identifies through risk assessment, including by: (1) Implementing and periodically reviewing access controls; (2) Identify and manage the data, personnel, devices, systems, and facilities that enable the institution to achieve business purposes in accordance with their relative importance to business objectives and risk strategy; (3) Protect by encryption all customer information held or transmitted by the institution both in transit over external networks and at rest; (4) Adopt secure development practices for in-house developed applications utilized by the institution for transmitting, accessing, or storing customer information and procedures for evaluating, assessing, or testing the security of externally developed applications the institution utilizes to transmit, access, or store customer information; (5) Implement multi-factor authentication for any individual accessing any information system, unless the Qualified Individual has approved in writing the use of reasonably equivalent or more secure access controls; (6) (i) Develop, implement, and maintain procedures for the secure disposal of customer information in any format no later than two years after the last date the information is used in connection with the provision of a product or service to the customer to which it relates, unless such information is necessary for business operations or for other legitimate business purposes, is otherwise required to be retained by law or regulation, or where targeted disposal is not reasonably feasible due to the manner in which the information is maintained; and (ii) Periodically review the institution’s data retention policy to minimize the unnecessary retention of data; (7) Adopt procedures for change management; and (8) Implement policies, procedures, and controls designed to monitor and log the activity of authorized users and detect unauthorized access or use of, or tampering with, customer information by such users. (d) (1) Regularly test or otherwise monitor the effectiveness of the safeguards’ key controls, systems, and procedures, including those to detect actual and attempted attacks on, or intrusions into, information systems. (2) For information systems, the monitoring and testing shall include continuous monitoring or periodic penetration testing and vulnerability assessments. Absent effective continuous monitoring or other systems to detect, on an ongoing basis, changes in information systems that may create vulnerabilities, the institution shall conduct: (i) Annual penetration testing of its information systems determined each given year based on relevant identified risks in accordance with the risk assessment; and (ii) Vulnerability assessments, including any systemic scans or reviews of information systems reasonably designed to identify publicly known security vulnerabilities in its information systems based on the risk assessment, at least every six months; and whenever there are material changes to operations or business arrangements; and whenever there are circumstances the institution knows or have reason to know may have a material impact on its information security program. (e) Implement policies and procedures to ensure that personnel are able to enact the institution’s information security program; (f) Oversee service providers; and (g) Evaluate and adjust the institution’s information security program in light of the results of the testing and monitoring required by paragraph (d) of this section; any material changes to operations or business arrangements; the results of risk assessments performed under paragraph (b)(2) of this section; or any other circumstances that the institution knows or have reason to know may have a material impact on its information security program. Condition: The College does not have a designated a Qualified Individual responsible for implementing and monitoring the institution’s information security program. Additionally, the College does not have written information security program that addresses all the required minimum elements cited in the above Criteria. Cause: There is a lack of awareness or understanding of the GLBA requirements. Effect: The College is in noncompliance with applicable special tests and provisions for Gramm-Leach- Bliley Act–Student Information Security requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: The College management should consider training responsible personnel managing federal programs to be well informed of the applicable compliance requirements. Also, the College should designate a Qualified Individual responsible for implementing and monitoring the institution’s information security program. Lastly, the College should establish written information security program that addresses all the required minimum elements cited in the above Criteria. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.