2025-002 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Cash Management Repeat Finding: No Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.305 requires non-Federal entities using the advance payment method to minimize the time between the transfer of federal funds and their disbursement. Advance payments must be limited to the minimum amounts needed and aligned with the entity’s actual, immediate cash requirements. To use the advance payment method, entities must maintain written cash management procedures and financial management systems that provide effective control and accountability over federal funds. In addition, 2 CFR 200.302(b)(3) and (b)(6) require entities to maintain financial management systems and written procedures sufficient to permit the tracing of federal funds to underlying expenditures and to implement the cash management requirements of 2 CFR 200.305. 2 CFR 200.303 further requires entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including monitoring activities. For Title IV Student Financial Assistance programs, 34 CFR 668.162(b) requires institutions using the advance payment method to request funds only for amounts needed immediately for disbursements made or to be made to eligible students and to disburse those funds no later than three business days after receipt. Condition: The College did not have written procedures governing drawdowns, including draw calculations, timing, approvals, reconciliations, or the return of excess funds. Tested draws were not consistently supported by documentation evidencing the accuracy of the expenditures being reimbursed. In addition, the College did not perform or document reconciliations between underlying disbursement records and authorized draw requests and did not monitor cash balances to identify whether positive balances were carried forward from period to period. As a result, the College could not demonstrate that draw amounts consistently reflected only eligible expenditures incurred during the applicable period. Cause: Management had not established a formal, documented cash management control framework, and responsibilities for draw preparation, review, approval, reconciliation, and monitoring were not clearly defined. As a result, draw requests, supporting documentation, and reconciliations were prepared inconsistently or not retained, and controls were not in place to identify or prevent excess cash on hand. Effect: Because the College did not maintain written cash management procedures, retain consistent support for draw calculations, or perform and document reconciliations of draws to underlying student disbursements and cash balances, the College could not demonstrate that Title IV funds were drawn only for actual, immediate cash needs or that drawn funds were timely disbursed in accordance with advance payment requirements. This condition increases the risk that the College may draw excess cash or draw funds in advance of need, be unable to detect or prevent noncompliance due to inadequate internal controls, and be subject to the return of excess funds, administrative actions, or questioned costs if noncompliance could be quantified. Recommendation: The College should strengthen cash management controls over the SFA Cluster by implementing the following: 1. Adopting written cash management procedures addressing draw calculations, timing of draws, approvals and segregation of duties, required supporting documentation, reconciliation requirements, and the identification and return of excess cash. 2. Maintaining a standardized draw file for each draw that includes approval evidence, supporting disbursement detail, a reconciliation to student-level disbursements by award type, and documentation of cash balances before and after the draw. 3. Performing and retaining monthly reconciliations between student-level disbursement records and federal cash activity, including documented supervisory review. Auditor’s Note: The engagement team noted that the cash management control deficiencies described in this finding have a direct impact on the College’s ability to support other Title IV compliance requirements that rely on traceable federal cash activity, including Return of Title IV Funds (R2T4). Specifically, where the College does not retain draw or return support, does not perform reconciliations between underlying student transactions and authorized activity, and does not maintain a clear audit trail of federal cash balances, it may be unable to demonstrate that Title IV funds were returned to the Department when required and that such returns can be traced from student-level determinations through COD activity and ultimately to federal cash activity (e.g., G5). View of Responsible Officials: See Auditee’s Corrective Action Plan. Questioned Costs: $0, Unknown
2025-003 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Eligibility Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title IV Student Financial Assistance regulations require institutions to determine and document key components used in establishing a student’s eligibility for Title IV aid. Cost of Attendance (COA) is a required component in determining a student’s eligibility and award amounts for Title IV aid. Title 34 Code of Federal Regulations (CFR) Part 668.2 defines COA and specifies allowable components that must be consistently applied in determining student eligibility and Title IV aid awards. In addition, Title IV regulations require institutions to evaluate and monitor a student’s Satisfactory Academic Progress (SAP) status at appropriate points to determine continued eligibility for Title IV aid. Further, 2 CFR 200.303 requires non-Federal entities to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that federal programs are administered in compliance with applicable statutes and regulations. These internal controls include documentation retention, segregation of duties, and monitoring and review of key determinations that directly affect eligibility and award calculations. Condition: The College calculated Cost of Attendance outside of its student information system using a manually maintained Excel spreadsheet that could be altered without restriction. The College did not retain finalized COA determinations in a reliable or non-modifiable format, and supporting information necessary to independently recalculate COA amounts was not consistently available. In addition, while the College maintains that it calculated the students’ Satisfactory Academic Progress (SAP) status at the time eligibility determinations were made, it did not retain documentation or reports evidencing that SAP status was reviewed and considered as part of the eligibility determination process. The Financial Aid Director solely prepared COA and SAP determinations, and there was no independent review or approval of these calculations, resulting in a lack of segregation of duties. As a result, during audit testing, the engagement team was unable to reliably recalculate Cost of Attendance for certain students and unable to verify that students’ SAP status was appropriately reviewed when determining Title IV eligibility. Cause: Management has not established formal, documented methodologies or controls over eligibility determinations, including Cost of Attendance calculations and review of Satisfactory Academic Progress. Controls requiring system-based calculations, retention of supporting documentation, and documented supervisory review and approval were not in place, and responsibilities for preparation, review, and approval of eligibility components were not clearly defined. Effect: Because the College did not maintain reliable documentation or effective controls over key eligibility determinations, including Cost of Attendance calculations and evidence of Satisfactory Academic Progress review, the engagement team was unable to conclude that student eligibility for Title IV aid was determined accurately and in accordance with federal requirements for all students tested. As a result, the College may have awarded Title IV funds to students based on inaccurate or unsupported eligibility determinations, resulting in unknown questioned costs and material noncompliance with Title IV program requirements. Recommendation: The College should strengthen controls over Cost of Attendance determinations by: 1. Establishing written policies and procedures governing Cost of Attendance and Satisfactory Academic Progress determinations in accordance with Title IV requirements. 2. Utilizing the student information system, or another controlled system, to calculate and retain COA determinations and SAP evaluations in a non-modifiable format. 3. Implementing segregation of duties, including documented independent review and approval of COA determinations and evidence of SAP status review by an individual not involved in the original calculations. 4. Retaining sufficient supporting documentation to allow for independent recalculation and verification of Cost of Attendance amounts and confirmation that SAP was reviewed at the time eligibility determinations were made. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-004 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Reporting Questioned Costs: $0; Reporting only, no impact on award amount noted Repeat Finding: No Criteria: For Title IV programs reported through the Common Origination and Disbursement (COD) System, the U.S. Department of Education requires institutions to submit student disbursement records no later than 15 calendar days after making a disbursement or becoming aware of the need to adjust previously reported disbursement information. For the 2024-2025 award year, the Department provided a temporary flexibility under which institutions were not required to report disbursements made for the 2024-2025 award year until November 30, 2024, or 15 calendar days after the disbursement is made, whichever is later. For the Federal Pell Grant Program, Title 34 U.S. Code of Federal Regulations (CFR) Part 690.83 requires institutions to submit student Payment Data in accordance with prescribed procedures and to report changes by submitting updated Payment Data, and institutions must comply with procedures necessary to ensure reports are correct. For the Direct Loan Program, 34 CFR 685.309(a) requires participating schools to establish and maintain proper administrative and fiscal procedures and necessary records and to submit all reports required by the Direct Loan regulations and 34 CFR Part 668 to the Secretary. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including evaluating/monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing of COD System reporting for the Pell Grant and Direct Loan programs, the engagement team noted exceptions in both the accuracy and timeliness of information reported to COD: 1. Accuracy: One instance identified in which the Cost of Attendance (COA) amount reported to the COD System for a student was later determined incorrect. 2. Timeliness: Seven instances identified where disbursements were not reported to the COD System within required reporting timeframes, of which six relate to Pell Grant disbursements and one relates to Direct Loan disbursements. The College did not have a formal, documented process to validate key COD data elements prior to submission or to monitor and evidence timely reporting, including exception tracking and documented supervisory review. Cause: Management has not established formal, written procedures and related review or monitoring controls over COD reporting that address both (a) validation of key data elements prior to submission and (b) monitoring of required reporting timelines and timely correction of exceptions. As a result, COD reporting was susceptible to human error and delays without timely detection and correction. Effect: As a result of the lack of preventive and detective controls over COD reporting, inaccurate COA information was reported to COD for one student and disbursement reporting was not timely in seven instances subject to our compliance testing procedures. While the exceptions identified did not impact the students’ award amounts, they represent noncompliance with federal reporting requirements and increase the risk that COD submissions may be inaccurate, incomplete, or not timely corrected, which can impair effective reconciliation and program oversight. The College corrected the incorrect COA reported for the student identified. Recommendation: The College should strengthen controls over COD reporting by: 1. Implementing written COD reporting procedures that define required data validations (including key data elements such as COA), documentation standards, and responsibilities for preparation, review, and submission. 2. Establishing a secondary review and documented approval of COD submissions prior to transmission, including review of changes, corrections, and supporting documentation. 3. Implementing a recurring reporting cadence (e.g., weekly/bi-weekly) and an automated or standardized tracking log to monitor the 15-day disbursement reporting requirement and flag late items for timely follow-up. 4. Performing and retaining periodic reconciliations and exception monitoring between internal student records and COD-accepted records to validate accuracy and timeliness, including documentation of corrections and the basis for changes. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-005 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Return of Title IV Funds Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.22 requires an institution to determine the amount of Title IV aid earned when a Title IV recipient withdraws during a payment period or period of enrollment and to apply the Return of Title IV Funds requirements in accordance with the regulation. 34 CFR 668.24 requires institutions to establish and maintain program and fiscal records documenting the administration of Title IV programs, including documentation supporting each student’s receipt of Title IV funds, the amount, date, and basis of the institution’s calculation of the treatment of Title IV funds when a student withdraws, and documentation of the return of Title IV funds to the Department, as applicable. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of compliance with applicable statutes and regulations, including monitoring controls over key compliance processes. Condition: The College did not have a formal supervisory review process over Return of Title IV Funds (R2T4) calculations and related return activity. R2T4 calculations and submissions were prepared by the Financial Aid Director without documented independent review or approval. Additionally, the College did not maintain sufficient documentation to clearly identify and trace the specific return transmitted for each student subject to an R2T4 calculation with an institutional portion due to the Department. Rather than recording the return as a distinct transaction supported by a documented calculation and remittance trail, the Financial Aid Director manually adjusted the disbursed amounts in PeopleSoft to reflect net amounts after the return and also made manual updates within COD, without maintaining a supporting documentation package, audit trail, or reconciliation. As a result, for students tested, the engagement team could not reperform or trace student-level returns from the R2T4 calculation through COD activity and ultimately to cash activity in the federal funds accounts (e.g., G5). Given that this process applies to all students requiring an R2T4 calculation and an institutional return, the absence of supervisory review, documentation, and reconciliation represents a pervasive control deficiency. Cause: Management has not established formal written procedures and control requirements for R2T4 processing, including supervisory review and approval of calculations, documentation retention standards, and reconciliation of student-level R2T4 return amounts to system activity and federal cash activity. Responsibilities for review and reconciliation were not clearly defined, and the process relied on manual system edits that did not retain a reliable transaction trail. Effect: Because the College did not implement supervisory review over R2T4 calculations and did not maintain a complete documentation and reconciliation trail for student-level returns, the College was unable to demonstrate that institutional returns required by R2T4 were consistently calculated, recorded, and remitted in accordance with federal requirements. Recommendation: The College should strengthen controls over the R2T4 process by implementing the following: 1. Establish written R2T4 procedures requiring a standardized calculation and documentation package for each applicable withdrawal, including the withdrawal determination date, key calculation inputs, earned/unearned aid, and the institutional return amount. 2. Implement documented supervisory review and approval of each R2T4 calculation and related return submission prior to processing. 3. Eliminate undocumented manual netting edits and require returns to be recorded in a manner that preserves a clear, auditable trail (e.g., distinct transactions). 4. Perform and document periodic reconciliations of R2T4 calculation results to COD activity and COD activity to federal cash activity (e.g., G5), with documented investigation and resolution of differences. Auditor’s Note: The engagement team noted that the College’s inability to clearly trace and reconcile student-level R2T4 return amounts to COD activity and federal cash activity (e.g., G5) is consistent with the broader cash management control deficiencies described in the Cash Management finding. Specifically, the absence of standardized documentation, reconciliations, and monitoring over Title IV cash activity limits the College’s ability to evidence that R2T4 returns were processed and remitted accurately and in a manner that is verifiable and reproducible. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-006 Finding: Significant Deficiency in Internal Control Over Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Verification Questioned Costs: $0; Verification only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.51 through 668.61 require institutions participating in Title IV programs to comply with federal verification requirements, including verifying applicant information when selected, resolving discrepancies, and determining student eligibility prior to the disbursement of Title IV aid. An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61, including requirements for obtaining and reviewing acceptable documentation, completing verification, and maintaining records sufficient to demonstrate compliance with verification requirements. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable statutes and regulations, including appropriate documentation, supervisory review, and monitoring over verification activities. Condition: The College did not have a documented supervisory review process over verification procedures performed by financial aid processing staff. Verification activities were performed by individual processors; however, there was no documented evidence identifying who completed the verification, such as initials, signatures, system sign-offs, or other reviewer identifiers retained for audit purposes. While the Financial Aid Director indicated that random reviews of verification files occur periodically as part of staff training, these reviews were informal and not documented. As a result, the College could not demonstrate that verification procedures were consistently reviewed or approved to ensure accuracy and compliance. Cause: Management has not established formal, documented procedures requiring supervisory review, approval, and retention of evidence for verification activities. Responsibilities for documenting completion and review of verification were not clearly defined, and reliance was placed on informal monitoring practices that were not retained. Effect: Because the College did not retain evidence of who performed or reviewed verification procedures, the College could not demonstrate that verification requirements were consistently applied and appropriately reviewed for accuracy and completeness. This condition increases the risk that errors, omissions, or noncompliance in verification may not be detected or corrected on a timely basis due to insufficient internal controls and monitoring. Recommendation: The College should strengthen controls over verification by: 1. Establishing written verification procedures that define staff responsibilities, required documentation, and supervisory review expectations. 2. Requiring documented evidence of completion and review of verification activities (e.g., initials, electronic sign-off, or system workflow approvals) for each verification file. 3. Documenting supervisory or quality control reviews, including the scope and results of any spot reviews performed, and retaining this documentation for audit and monitoring purposes. View of Responsible Officials: See Auditee’s Corrective Action Plan
2025-007 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Disbursements to or on Behalf of Students Questioned Costs: $0; Notification requirement only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 668.165(a)(1) requires that, before an institution disburses Title IV funds for any award year, the institution must notify the student of the amount of funds the student (or parent) can expect to receive under each Title IV program and how and when those funds will be disbursed. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing related to disbursements to or on behalf of students, the engagement team identified seven Pell Grant students for whom the required notification of Title IV funds and disbursement timing was not provided prior to the Pell disbursement. In each instance, the student was notified of the award after the disbursement had already been made. The College did not have a formal, documented process to ensure required notifications were issued before disbursement, or to evidence supervisory review and exception monitoring over the timing of notifications. Cause: Management has not established written procedures and related review or monitoring controls over the timing of Title IV disbursement notifications, including defined responsibility, documentation standards, and supervisory review to ensure notices are issued before disbursement. As a result, required notifications were not consistently provided timely. Effect: As a result of the lack of preventive and detective controls over disbursement notification requirements, the College did not timely notify students prior to disbursing Pell Grant funds in seven instances subject to our compliance testing procedures. While no impact on the students’ award amounts was noted, the exceptions represent noncompliance with federal notification requirements and increase the risk that students may not receive required information about their Title IV funding and disbursement timing prior to funds being disbursed. Recommendation: The College should strengthen controls over Title IV disbursement notifications by: 1. Implementing written procedures requiring the Title IV notification to be issued prior to any Title IV disbursement for the award year, including required content, timing, and documentation requirements. 2. Implementing documented supervisory review of notifications and exception follow-up to ensure notices are timely and recurring issues are promptly corrected. View of Responsible Officials: See Auditee’s Corrective Action Plan.