2025-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031C210038 Award Year: 2024-25, 2023-24, 2022-23, 2021-22 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(g), including that charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 14 employees out of a population of 28 employees whose compensation was charged to the awards was selected. Of the 14 employees selected, we found errors with 7 employees, across a sample of 11 separate payroll transactions, which consisted of the following: • For 6 employees across one or more payroll transactions selected, no records were available to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. • In one instance, an employee’s time was charged to the grant at a pay rate that was less than the approved pay rate in effect. The grant was undercharged. • In one instance, no records were available to support an employee stipend charged to the grant. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however, in accordance with 2 CFR section 200.430 (g)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Costs are charged based on budgeted amounts and support for actual time is not maintained consistently as such questioned costs are not identified. Known questioned cost for stipend charged to the grant was $113. Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2024-002 Recommendation – We recommend the University implement an internal control policy that satisfies the requirements outlined in 2 CFR section 200.430(g). Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its internal controls over personnel expenses charged to federal awards and sponsored projects.
2025-003 – Special Tests and Provisions - Enrollment Reporting – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Student Financial Assistance Cluster Federal Assistance Listing Number: 84.063, 84.268 Federal Program Name: Federal Pell Grant Program, Federal Direct Student Loans Federal Award Number: P063P242403, P268K252403 Award Year: 2024-25, 2023-24, 2022-23, 2021-22 Criteria – The National Student Loan Data System (NSLDS) is the Department of Education’s (ED) centralized database for students’ enrollment information under the Pell Grant and the Direct Loan and Federal Family Education Loan programs. Uniform guidance requires institutions to have internal controls in place to ensure attendance changes for students are reported to NSLDS within at least 60 days of when the student attendance change occurs. It is the University’s responsibility to update students' enrollment information timely and accurately as outlined in 34 CFR § 685.309. Institutions are responsible for accurately reporting certain significant data elements under the Campus-Level Record and Program-Level Record that ED considers high risk, which includes the student's program as per the Classification of Instructional Programs (CIP) code, and the student's status change Effective Date. Condition/context – We selected a sample of 23 students out of a population of 251 who had received Federal aid and were reported to NSLDS during the fiscal year. We compared the significant data elements under the Campus-Level and Program-Level Records that ED considers high risk as reported to NSLDS to the data included in the student's academic records, other institutional records, and the withdrawal or graduation date per the University’s records. We noted exceptions with 9 out of the 23 students tested which included the following: • 4 selections were not reported to NSLDS within the required timeframe. • 2 selections reported a program level enrollment status to NSLDS that did not properly reflect the student’s enrollment status. Additionally, for these 2 selections we were unable to verify that the campus level status was reported timely based on the support provided. • 2 selections reported both a campus level and program level enrollment status to NSLDS that did not properly reflect the student’s enrollment status. • 1 selection reported a program level beginning date and enrollment status effective date for both campus and program level to NSLDS that did not match the students’ records. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None. Cause/effect – This occurred because of lack of controls and oversight of the process. This resulted in incomplete and inaccurate reporting of the information to NSLDS. The enrollment information reported to NSLDS is utilized by ED, the Direct Loan program, lenders, and other institutions to determine in-school status. Repeat finding – Yes, 2024-003 Recommendation – We recommend the University follow and enhance existing policies to ensure all student changes in status are identified timely and submitted accurately within the required time frame. We also recommend the University establish a formal internal monitoring control whereby a designated individual with NSLDS access, on a sample basis, spot checks the status updates on NSLDS so to internally audit the National Student Clearinghouse submissions. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its enrollment reporting and monitoring processes. The University is focused on building capacity within the Financial Aid department, clearly assigning responsibility for enrollment reporting activities, and establishing specific timelines and checkpoints to ensure required status changes are identified, reviewed, and submitted within required timeframes.
2025-004 – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education, National Science Foundation Federal Assistance Listing Number: 84.031, 84.184X, 47.074, 47.076 Federal Program Name: Higher Education Institutional Aid, Mental Health Service Professional Demonstration Grant, Research and Development Cluster Federal Award Number: Various Award Year: 2024-25, 2023-24, 2022-23 Criteria – Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) for real property and equipment management. 2 CFR 200.313(d)(1) requires that property records must be maintained that include, among other things, description of the property, source of funding for the property and percentage of Federal participation in the project costs for the Federal award under which the property was acquired. 2 CFR 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition/context – Based on a walkthrough of the control environment, the University is not maintaining comprehensive property records that include all the required elements for purchases of assets with federal funds. In addition, the University did not perform a physical inventory for those purchases in the last two years. Questioned costs – None. Cause/effect – This occurred because of lack of controls and an antiquated equipment tracking system. The University is unable to satisfy the requirement that they maintain proper records for equipment and adequately safeguards and maintains equipment. Repeat finding – Yes, 2024-004 Recommendation – We recommend the University update their equipment tracking system to allow the University to identify assets purchased with federal money. In addition, we recommend the University perform a physical inventory of its fixed asset at least once every two years. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and recognizes the need to strengthen its processes surrounding the identification, tracking, and monitoring of federally funded equipment.
2025-005 – Special Tests and Provisions – Return of Title IV Funds (R2T4) – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Student Financial Assistance Cluster Federal Assistance Listing Number: 84.063, 84.268, 84.007 Federal Program Name: Federal Pell Grant Program, Federal Direct Student Loans, Supplemental Educational Opportunity Grant Federal Award Number: P063P242403, P268K252403, P007A244364 Award Year: 2024-25, 2023-24, 2022-23 Criteria – In accordance with 34 CFR 668.22 when a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student’s withdrawal date. Condition/context – We note that the University was unable to provide a complete population of unofficial withdrawals and during the fiscal year, controls were not properly implemented to ensure that unofficial withdrawals would be identified. We selected a sample of 3 official withdrawals from a population of 12 total withdrawals and noted exceptions with all 3 selections as follows: • For all selections, we noted that the R2T4 calculations were incomplete or calculations were not consistent with underlying support. As a result, for two of the selections, we recalculated an amount to be returned that did not match the University’s calculation. • For all three selections, the University did not return the correct amount of funds per their calculation as follows: o Student #1 returned $1,641, should have returned $2,557 o Student #2 returned $650, should have returned $568 o Student #3 returned $2,969, should have returned $3,488 • For one selection the withdrawal date used in the calculation did not match the underlying support, • For two of the selections, funds were returned outside the required timeframe. Our sample was not, and was not intended to be, statistically valid. Questioned costs – $1,353 Cause/effect – This occurred because of lack of controls and processes in place to ensure withdrawals are properly monitored and identified; and calculations are completed accurately and return of funds are completed timely. This resulted in the calculations being incorrect and money not being returned to the federal government accurately or timely. Repeat finding – Yes, 2024-005 Recommendation – We recommend the University review their policies and procedures to ensure all withdrawals, including unofficial withdrawals where the student does not give formal notification can be identified and accurately evaluated. We also recommend a control be put in place to ensure the calculations and return of funds are performed accurately and timely. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is reviewing its withdrawal and Return of Title IV (R2T4) processes to strengthen both the timely identification of student withdrawals and the accurate and timely completion of required calculations and return of funds.
2025-006 – Eligibility – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Student Financial Assistance Cluster Federal Assistance Listing Number: 84.063, 84.268, 84.033, 84.007 Federal Program Name: Federal Pell Grant Program, Federal Direct Student Loans, Federal Work Study, Federal Supplemental Educational Opportunity Grant Federal Award Number: P063P242403, P268K232403, P033A244364, P007A244364 Award Year: 2024-25, 2023-24 Criteria – Institutions are required to determine student eligibility for some Title IV programs who have financial need known as “need-based” programs. The total aid that a student receives from need-based programs may not exceed the student’s financial need. For other Title IV programs, eligibility is based on the student’s expected family contribution. Institutions are required to have controls in place to support the eligibility of each student for need and non-need based programs. Condition/context – We selected a sample of 41 students out of a population of 742 students who received Title IV aid during the year. Of the 41 samples selected we found the following errors with student’s eligibility for need and non-need based programs: • 2 students appeared to receive Pell disbursements that were less than their eligible award. The University was unable to support the amount of Pell award calculated. • 2 students received adjustments reducing their budgeted cost of attendance in error that was not identified by the University • 4 students in our sample did not receive their refund disbursements within the required timeframe due to administrative processing errors. • 6 students had one or more elements of their budgeted cost of attendance that did not tie to the approved cost of attendance schedule. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None Cause/effect – This occurred because of turnover in the student financial assistance office and a lack of properly documented and implemented control policies and procedures to ensure accurate determination and application of student aid eligibility. Repeat finding – Yes, 2024-007 Recommendation – We recommend the University implement the proper controls to ensure the determination of student eligibility for Title IV aid is appropriate and supported. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its processes and internal controls surrounding the determination and documentation of student eligibility for Title IV aid.
2025-007 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Federal Assistance Listing Number: 84.184 Federal Program Name: Mental Health Service Professional Demonstration Grant Program Federal Award Number: S184X230057 Award Year: 2024-25, 2023-24 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(g), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 9 employees out of a population of 17 employees whose compensation was charged to the awards was selected. Of the 9 employees selected we found errors with 8 employees, across a sample of 18 separate payroll transactions, which consisted of the following: • For 3 employees across one or more payroll transactions selected, no records were available to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. • For 3 employees across one or more payroll transactions selected, the time and effort reports were not completed and reviewed in a timely manner. • For 4 employees across one or more payroll transactions selected, the time and effort reports were missing key elements including employee signatures and indication of timely review by an individual knowledgeable of grant activities The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however, in accordance with 2 CFR section 200.430 (g)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable as records to support allocation were not complete or accurate. Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2024-008 Recommendation – We recommend the University implement an internal control policy that satisfies the requirements outlined in 2 CFR section 200.430(g). Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its internal controls over personnel expenses charged to federal awards and sponsored projects.
2025-008 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance National Science Foundation Federal Assistance Listing Number: Various Federal Program Name: Research and Development Cluster Federal Award Number: Various Award Year: 2024-25, 2023-24 Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(g), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition/context – A sample of 6 employees out of a population of 15 employees whose compensation was charged to the awards was selected. Of the 6 employees selected we found errors with 5 employees, across a sample of 12 separate payroll transactions, which consisted of the following: • For 2 employees across one or more payroll transactions selected, no records were available to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. • For 3 employees across one or more payroll transactions selected, the time and effort reports were missing key elements including employee signatures and indication of timely review by an individual knowledgeable of grant activities. Our sample was not, and was not intended to be, statistically valid. Questioned costs – Undeterminable as records to support allocation were not complete or accurate. Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award. Repeat finding – Yes, 2024-009 Recommendation – We recommend the University implement an internal control policy that satisfies the requirements outlined in 2 CFR section 200.430(g). Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its internal controls over personnel expenses charged to federal awards and sponsored projects.
2025-009 – Procurement Suspension and Debarment – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031C210038 Award Year: 2024-25, 2023-24, 2022-23, 2021-22 Criteria – Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220 Condition/context – Out of a sample of 2 procurement transactions selected for testing, for 1 transaction management was unable to provide supporting documentation for a signed contract, review and approval of purchase, or that the correct procurement policies were followed based on the contract value. Additionally, the University was unable to provide support that either vendor was reviewed for suspension and debarment prior to contract approval. Our sample was not, and was not intended to be, statistically valid. Questioned costs – The University asserted that the amount charged to the grant for the contractor was $63,174 however we were unable to obtain a signed contract or verify the total disbursements for the year. Cause/effect – The University does not have the proper controls in place to ensure procurement transactions adhere to the standards set out in 2 CFR 200.318 through 200.327, or to ensure covered transactions are being reviewed in accordance with 2 CFR 180.220. The lack of controls increases the risk of the University entering into transactions that do not meet the applicable standards, or with entities who may be suspended or debarred from receiving payments from federal funds. Repeat finding – No Recommendation – We recommend the University review their current control policies and procedures, and ensure controls are designed and implemented that satisfy the requirements outlined in 2 CFR 200.318 through 200.327 and 2 CFR 180.220. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is reviewing its current procurement policies, procedures, and internal controls as they relate to purchases made with federal funds.
2025-010 – Reporting – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Student Financial Assistance Cluster Federal Assistance Listing Number: 84.063, 84.268 Federal Program Name: Federal Pell Grant Program, Federal Direct Student Loans Federal Award Number: P063P242403, P268K252403 Award Year: 2024-25 Criteria – Institutions submit Direct Loan and Pell Grant origination records and disbursement records to the Common Origination and Disbursement (COD) system. The University is responsible for accurately reporting origination and disbursement records including disbursement date and amount. Condition/context – We selected a sample of 41 students out of a population of 742 students who received Title IV aid during the year. Of the 41 samples selected we found the following errors with the disbursement records reported to COD: • 3 students had amounts reported to COD for direct loan or Pell disbursements that did not match the amount disbursed per the student account records. 2 students had account records that reflected less direct loan disbursements than were reported to COD for a total of $6,532 and one student reported an additional $924 in Pell and an extra $6,185 in direct loan disbursements per their student account records than was reported to COD. • 33 students had disbursement dates reported to COD for direct loans or Pell disbursements that did not match the date applied per the student account records. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None Cause/effect – This occurred because of turnover in the student financial assistance office and a lack of properly documented and implemented control policies and procedures to ensure accurate application of disbursements to student records, and accurate and timely reporting of disbursements to COD. Repeat finding – No Recommendation – We recommend the University implement the proper controls to ensure that disbursements are accurately applied to student accounts and reported to COD accurately and timely. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its controls over the disbursement and reporting of Title IV funds. Management is reviewing the processes between Financial Aid and Student Accounts to ensure disbursements are accurately applied to student accounts and reported to COD completely, accurately, and within required timeframes.
2025-011 – Special Tests and Provisions - Verification – Material Weakness in Internal Controls over Compliance and Instance of Noncompliance Department of Education Student Financial Assistance Cluster Federal Assistance Listing Number: 84.063, 84.268, 84.033, 84.007 Federal Program Name: Federal Pell Grant Program, Federal Direct Student Loans, Federal Work Study, Federal Supplemental Educational Opportunity Grant Federal Award Number: P063P242403, P033A244364, P268K252403, P007A244364 Award Year: 2024-25 Criteria – An institution is required 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. The institution shall require each applicant whose application is selected by ED to verify the information required for the Verification Tracking Group to which the applicant is assigned. Condition/context – The University was unable to provide an accurate and complete population of students selected for verification during fiscal year 2024-2025. We selected one student during the year who was verified for testing. Based on a review of the support provided and discussion with management, it was determined that the verification was missing salary information for the dependent student’s parents. The University did not follow up on the discrepancy between the student’s verification request and the information reported in the students Institutional Student Information Record (ISIR). Questioned costs – Undeterminable, as the information was not verified, we are not able to determine if the need based aid would have been effected. Cause/effect – This occurred because of turnover in the student financial assistance office and a lack of properly documented and implemented control policies and procedures to ensure that students selected for verification are properly reviewed and verified. Repeat finding – No Recommendation – We recommend the University implement the proper controls to ensure that verification of students is completed accurately and according to the applicable guidance. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is strengthening its processes and internal controls surrounding student verification. As part of the University's broader efforts to build capacity within the Financial Aid department, management is reviewing existing verification procedures to ensure requirements are clearly documented, consistently applied, and aligned with applicable federal guidance.