Audit 407295

Finding No.: 2025-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria In accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance 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). To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented. Conditions Found During our audit we found 2 out of 9 samples selected for our compliance testwork, the College used an incorrect indirect cost (IDC) rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. Cause The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. Possible Asserted Effect The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. Questioned Costs The known questioned costs are $1,836 and the likely questioned costs are $2,282. Statistical Sampling Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding The condition found constitutes a repeat finding from the prior year. Recommendation We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.

Finding No.: 2025-003- Equipment – Material weakness and material non-compliance Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria Institutions with federally acquired research and development equipment must adhere to specific guidelines outlined in 2 CFR 200.313. This regulation mandates that entities conduct bi-annual inventory counts of federally acquired equipment to ensure accurate tracking and accountability. It requires maintaining detailed records of all equipment, including acquisition date, cost, location, and current status, to reflect any changes or discrepancies following each inventory count. Additionally, the regulation specifies procedures for the appropriate disposal of federally acquired equipment that is no longer needed or has reached the end of its useful life. Entities must request disposal instructions from the federal awarding agency and ensure that disposal methods comply with federal regulations, including obtaining necessary approvals and documenting the disposal process. Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance 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 Found During our testing over equipment, we identified that the College did not conduct an inventory count in the fiscal year under audit or the preceding fiscal year. During our testing over equipment dispositions, we noted that the College maintains a listing of equipment disposals, this listing did not include the date of disposition. Additionally, management was unable to provide documentation demonstrating that during the disposition of equipment the College requested disposition instructions from the federal awarding agency, when required by the terms and conditions of the award and was unable to provide supporting documentation of the individual disposals. Cause The cause of this condition was that the College did not follow its internal policies to conduct a physical inventory count, which contributed to the inability to track the specific timing of equipment retirements. Furthermore, the College lacked formally written policies and procedures governing the disposal of federally acquired equipment to ensure the disposal process, including obtaining necessary approvals, is documented and executed in compliance with Uniform Guidance. Possible Asserted Effect Improper disposal practices and the failure to perform a physical inventory count compromise the integrity of inventory management. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management perform a thorough physical inventory audit to locate all equipment and update the master equipment listing with accurate details, including current locations and statuses. Additionally, we recommend the institution review and regularly circulate formal policies and procedures for the appropriate disposal of non-functional or obsolete equipment. This should include obtaining necessary approvals and documenting the disposal process as per federal guidelines and federal awarding agency instructions. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.

Finding No.: 2025-004 – Enrollment Reporting- Significant deficiency Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria In accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance 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 Found During our enrollment reporting testing we identified the following: (1) For 9 of 60 students selected for testing, the student’s graduation or withdrawal status was not updated within 60 days, the required timeframe to be reported to the NSLDS. The student’s identified had been granted extension periods to complete coursework. (2) For 1 of 60 students selected for testing the enrollment status in the NSLDS did not agree to the College’s internal records. (3) For 4 of 60 students selected for testing the College’s records lacked sufficient evidence to demonstrate when the institution became aware of the students’ status changes. Cause The cause of this noncompliance was a control deficiency in which the institution lacked sufficient monitoring, documenting, and review procedures over student enrollment status changes reported to the NSLDS. The engagement team notes that the institution did not have a reconciliation process to ensure status updates, specifically graduation and withdrawal dates, were accurately tracked and reported within the required timeframes, particularly when coursework extension periods were granted. Additionally, the institution lacked a formal review mechanism to cross-reference NSLDS records against internal databases to identify individual discrepancies, as well as a standardized procedure to document and retain the specific dates on which official status change notifications were received. Possible Asserted Effect Failure to perform review procedures over enrollment reporting changes could result in reporting more or less students enrolled receiving financial aid than what true enrollment is which could result in students receiving aid when not required or failure to receive aid from the Department of Education. Questioned Costs Not applicable. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management implement a monitoring and review process to ensure all student enrollment status changes are accurately and timely transmitted to the NSLDS. Specifically, management should establish a formal tracking mechanism for students granted coursework extensions to ensure their graduation or withdrawal dates are updated within required timeframes, and design a monthly reconciliation procedure to cross-reference NSLDS records against internal student databases to identify and resolve any individual discrepancies. Additionally, management should implement a standardized document retention policy to consistently record and preserve the dates the institution becomes aware of student status changes to ensure compliance with federal reporting deadlines. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.