Finding 2025-003 – U.S. Department of Education (ED) – Federal Work-Study - Noncompliance With Cash Management (Material Weakness): Information on the federal program –Federal Work-Study, FAL No. 84.033, June 30, 2025. Criteria – The Uniform Guidance (§200.305(b)) requires non-Federal entities to minimize the time elapsing between the drawdown of federal funds and the disbursement of those funds for program purposes. For the Federal Work-Study Program, institutions are required to draw federal funds only as funds are needed to reimburse allowable student payroll costs and related employer share expenses and to promptly disburse or return excess federal funds. Condition – As of June 30, 2025, the College reported excess federal cash of $415,971 related to the Federal Work-Study Program. The excess cash represented cumulative federal funds drawn down through the federal payment system that were not disbursed for allowable Federal Work-Study payroll costs as of year-end. The excess cash balance included amounts related to prior award years that had not been fully liquidated through reimbursement of allowable student wage expenditures or returned to the U.S. Department of Education as of June 30, 2025. Cause – The excess cash condition resulted from insufficiently effective cash-management monitoring controls over the Federal Work-Study Program. While allowable payroll expenditures were incurred and supported, cumulative federal draw activity was not adjusted on a sufficiently timely basis to ensure ongoing compliance with 2 CFR §200.305(b). Effect - As a result, the College held federal funds for an extended period beyond immediate program needs, resulting in noncompliance with federal cash-management requirements. Holding excess federal cash increases the risk that federal funds are not administered in accordance with applicable regulations and oversight expectations. Questioned Costs – $415,971 Repeat Finding – Yes. Auditor’s Perspective – From the auditors’ perspective, the excess federal cash balance identified represents a material weakness in cash-management controls over the Federal Work-Study Program. Although the College incurred allowable and supported Federal Work-Study payroll expenditures, routine cash-management procedures did not sufficiently ensure that federal funds were drawn only as needed and promptly liquidated. Government Auditing Standards and the Uniform Guidance emphasize the importance of effective monitoring controls to prevent the accumulation of excess federal cash and to ensure compliance with cash-management requirements. Auditor’s Recommendations – The auditors recommend that the College implement and document routine cash-management reconciliation procedures for the Federal Work-Study Program. At a minimum, reconciliations should be performed regularly between federal drawdowns, allowable payroll expenditures, and amounts subject to liquidation or return. Management review and approval of these reconciliations should be documented to ensure ongoing compliance with 2 CFR §200.305(b). Views of Responsible Officials – The College requests drawdowns for the Federal Work- Study Program on a reimbursable basis, including review and approval procedures. Of the total amount identified, $26,466 related to FY 2025, with the balance relating to prior year(s) activity. The College will review its Federal Work-Study Program cost allocation procedures to ensure all eligible costs are properly identified and supported. The College has engaged two accounting firms to assist with staff training and bring all reconciliations current. In addition, standard month-end and year-end closing procedures will be implemented to address timely, accurate Federal Work-Study Program reconciliations and audit readiness going forward.
Finding 2025-004 – Various Federal Programs: Cash Management – Excess Federal Cash, Untimely Reconciliations (Material Weakness): Information on the federal program – Strengthening Historically Black Colleges and Universities (HBCUs), (Title III), FAL No. 84.031B, June 30, 2025; Historically Black Colleges and Universities (HBCU) (FUTURE ACT), FAL No. 84.031E, June 30, 2025; Minority Science and Engineering Improvement Program (MSEIP), FAL No. 84.120A, June 30, 2025; Science Consortium of Minority Schools, FAL No. 84.120A, June 30, 2025; Empowerment of Undergraduate STEM Majors through Scholarships and Strengthening STEM Identity, FAL No. 47.076, June 30, 2025; Tennessee Louis Stokes (TSLAMP), FAL No. 47.076, June 30, 2025. Criteria – 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards. 2 CFR §200.305(b) requires that payments be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity. 2 CFR §200.308 requires that expenditures remain within approved budget limits unless prior approvals are obtained. Condition – At June 30, 2025, the College maintained excess federal cash balances across multiple federal programs, indicating that cash drawdowns and/or payable balances were not aligned with immediate cash needs for allowable program expenditures. These balances represented federal funds drawn or recorded as payable to federal agencies that were not supported by actual and immediate allowable program expenditures at year-end. The following table summarizes excess federal cash balances identified by program as of June 30, 2025: "Minority Science and Engineering Improvement Program" 120,031 "Science Consortium of Minority Schools" 169,907 "NSF - Empowerment of Undergraduate STEM Majors" 94,801 "NSF - Tennessee Louis Stokes TSLAMP" 54,834 "Title 111" 455,679 "FUTURE" 188,215 "Total Identified Excess Cash" "$ 1,083,467" Condition – (Continued) The College did not adequately reconcile federal cash activity to underlying grant expenditures on a timely basis and did not ensure that drawdowns were limited to amounts necessary to meet immediate cash needs. In addition, the College lacked effective monitoring controls to identify and resolve excess cash positions across federal programs in a timely manner. Federal bank reconciliations were untimely and error-prone. Corrections occurred only after auditor inquiry. Federal accounts also earned excess interest. Cause – The College lacked sufficient policies, procedures, and supervisory review controls to ensure that federal cash drawdowns were based on actual expenditures, that federal cash and grant reconciliations were prepared timely and accurately. Additionally, monitoring controls over cash balances, interest tracking and remittance were not effectively designed or implemented across federal programs. Effect – The lack of effective controls over federal cash management resulted in excess cash being maintained beyond immediate program needs. These conditions increase the risk of noncompliance with federal requirements, including potential return of excess cash or disallowed costs, and increase the risk of material misstatement of federal expenditures and cash balances. Questioned Costs – $1,083,467 Repeat Finding – No Auditor’s Perspective – From a compliance perspective, maintaining excess federal cash balances indicates that the College’s internal control over compliance did not operate effectively during the audit period. The condition demonstrates that drawdowns were not consistently based on actual incurred costs and that monitoring over federal cash was not functioning as designed. Given the pervasiveness of these conditions across multiple programs, this represents a systemic control deficiency. In accordance with 2 CFR §200.303 and auditing standards, this condition constitutes a material weakness in internal control over compliance. Auditor’s Recommendation – We recommend that the College strengthen controls over federal cash management and budget monitoring by implementing procedures to ensure that drawdowns are based on actual allowable expenditures and limited to immediate cash needs. Management should establish and enforce timely grant and federal bank reconciliation processes, monitor interest earnings and federal cash balances, and implement supervisory review controls to ensure compliance with federal requirements across all programs. Views of Responsible Officials – The College requests drawdowns for Title III and FUTURE programs on a reimbursable basis, including review and approval procedures. Of the total amount identified for the Title III program, a $181,433 receivable related to FY2025. The balance related to prior year(s) activity. The College will review its Federal program cost allocation procedures to ensure all eligible costs are properly identified and supported. The College has engaged two accounting firms to assist with staff training and bring all reconciliations current. In addition, standard month-end and year-end closing procedures will be implemented to address timely, accurate Federal program reconciliations and audit readiness going forward. The College experienced significant staff turnover within the business office. In addition, the College is undergoing conversion to a new Enterprise Resource Planning (ERP) system which affected its ability to complete some functions within a timely manner.
Finding 2025-005 – Untimely Release of Title IV Credit Balances (Significant Deficiency): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that fourteen (14) out of sixty (60) sampled students had Title IV created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. All refunds were eventually released to the students. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs - $0 Repeat Finding – Yes Perspective – Title IV credit balances must be released to students or parents within 14 days of the date the credit balance is created, in accordance with federal cash management requirements. Timely disbursement is a critical control designed to ensure that students receive funds needed to cover educational expenses and to prevent institutions from improperly holding federal funds. During testing, fourteen (14) out of sixty (60) students (23.3%) were identified with untimely refund disbursements, indicating that controls over cash management and refund processing did not consistently operate effectively. Untimely disbursement may result in students not receiving funds when needed and places the College at risk of noncompliance with federal regulations and potential liabilities. Auditor’s Recommendation – The College should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. View of Responsible Officials – The College experienced significant staff turnover within the business office. In addition, the College is undergoing conversion to a new Enterprise Resource Planning (ERP) system which affected its ability to complete some functions in a timely manner. The College has engaged two accounting firms to assist with staff training and bring all functions current.