Finding No.: 2024-005 - Allowable Costs/Cost Principles Identification of the federal program: Federal Agency: U.S. Department of the Interior AL No. and Title: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Criteria or specific requirement (including statutory, regulatory or other citation): 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 recipient or 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). Condition: Supporting documentation are insufficient to support whether transactions are necessary and reasonable for the performance of the Federal award. Cause: The College lacks adequate internal controls over compliance with applicable allowable cost/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures charged to federal program are necessary and reasonable for the performance of the Federal award. Effect or potential effect: The College is in noncompliance with applicable allowable cost/cost principles requirements. Questioned costs: Undeterminable. Due to insufficient information and unestablished allocation, questioned costs related to the federal expenditures that may result from discrepancies noted are not determinable. Context: We identified 2,122 transactions recorded during the year totaling $2,200,329. We tested 60 transactions totaling $191,938. The samples were statistically valid. Of 60 transactions tested, 20 (or 33%) have insufficient documentation to support whether transactions are necessary and reasonable for the performance of the Federal award. Details of samples with noncompliance are as follows: For item #s 1 through 4, we noted that rate paid to the employees is higher compared to the rate per employee contract on file. Further, for item #4, there is no supporting documentation on file to substantiate the hardship differential paid to the employee. For item #s 5 through 6, the hours paid is higher compared to the hours recorded on the approved timesheet. Item # 7 relates to payroll transaction of a salaried employee whose submission of timesheet is not required. However, we noted that hours paid is higher compared to the hours approved by the supervisor. Context, continued: For item #s 8 through 15 and #19, there were no approved timesheet on file to substantiate the actual number of hours worked. For item #s 16 through 19, approval of the amount paid to employees relating to leave was not on file. Further, for item #19, there is no supporting documentation on file to substantiate the hardship differential paid to the employee. Item #20 relates to employee’s related fringe benefits (employer contributions for health insurance) allocated and charged to federal grant for which no sufficient documentation was on file (i.e. semester section offering or instructor’s schedule) to ascertain whether service was received. Identification as a repeat finding, if applicable: 2023-005 Recommendation: College management should improve internal control policies and strengthen controls and procedures over compliance with applicable allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-006 - Equipment and Real Property Management Identification of the federal program: Federal Agency: U.S. Department of the Interior AL No. and Title: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Criteria or specific requirement (including statutory, regulatory or other citation): Furthermore, 2 CFR 200.303(a) states that “the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or 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).” 2 CFR 200.313(d) states that “Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: a. Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. b. A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The non-Federal entity must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. d. Regular maintenance procedures must be in place to ensure the property is in proper working condition. e. If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return”. 2 CFR 200.313(e) states that when original or replacement equipment acquired under a federal award is no longer needed for a federal program (whether the original project or program or other activities currently or previously supported by the federal government), the non-federal entity must request disposition instructions from the federal awarding agency if required by the terms and conditions of the award. Items of equipment with a current per-unit fair market value of $5,000 or less may be retained, sold, or otherwise disposed of with no further obligation to the federal awarding agency. If the federal awarding agency fails to provide requested disposition instructions within 120 days, items of equipment with a current per-unit fair market value in excess of $5,000 may be retained or sold. The federal awarding agency is entitled to the federal interest in the equipment, which is the amount calculated by multiplying the current market value or sale proceeds by the federal agency’s participation in total project costs. Condition: The equipment records did not meet the criteria above and are not effectively maintained. Specifically, we noted the following: 1. Certain information in the equipment records are either incomplete or missing, such as the source of funding for the property (including the FAIN), who holds title, 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). 2. An inventory of equipment has been performed on for at least once every two (2) years. However, the result of the physical inventory was not reconciled with the equipment records. 3. As equipment records are not effectively maintained, it does not appear that the College has effectively developed means to adequately safeguard equipment from loss, damage, or theft, or to reasonably investigate such occurrences. 4. Long-lived assets are not routinely evaluated for possible impairment. 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 equipment and real property reconciliations and related general ledger accounts are not effectively implemented. Effect or potential effect: The College is in noncompliance with applicable equipment and real property management requirements. Questioned costs: Undeterminable Context: We are unable to assess the overall cumulative monetary value of the conditions noted above. However, the table below summarizes total capital outlays over the past five years: Identification as a repeat finding, if applicable: 2023-006 Recommendation: College management should establish and strengthen internal control policies and procedures over compliance with applicable federal regulations on equipment and real property management. Specifically, the equipment listing should include all the required information in 2 CFR 200.313(d). Moreover, periodic and timely performance and independent review of equipment and real property reconciliations and related general ledger accounts should be implemented. Lastly, long-lived assets should be routinely evaluated for possible impairment. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-007 - Period of Performance Identification of the federal program: Federal Agency: U.S. Department of the Interior AL No. and Title: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Criteria or specific requirement (including statutory, regulatory or other citation): The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during where costs resulting from obligations of the funding period may be charged. 2 CFR 200.344(c) states: The recipient must liquidate all financial obligations incurred under the Federal award no later than 120 calendar days after the conclusion of the period of performance. When justified, the Federal agency or pass-through entity may approve extensions for the recipient or subrecipient. 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 recipient or 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). Condition: 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 or potential effect: The College is in noncompliance with applicable period of performance requirements. Questioned costs: $8,351 Context: We identified 333 transactions recorded during the beginning of the period of performance totaling $349,375. We tested 40 transactions totaling $55,185. The samples were statistically valid. Of 40 transactions tested, 19 (or 48%) transactions were incurred prior to the period of performance. Details of samples with noncompliance are as follows: Identification as a repeat finding, if applicable: 2023-007 Recommendation: College management should improve internal control policies and strengthen controls to comply with applicable period of performance requirements. Specifically, review should be performed to ensure all costs charged to the program are incurred within the funding period stipulated in the grant awards. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-008 – Procurement and Suspension and Debarment Identification of the federal program: Federal Agency: U.S. Department of the Interior AL No. and Title: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Criteria or specific requirement (including statutory, regulatory or other citation) #1: 2 CFR 200.318(a) states that “the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR 200.317 through 200.327.” Accordingly, documented procedures must ensure consistency to the following standards: a. 2 CFR 200.318 which includes oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements; b. 2 CFR 200.320(a) which states that for micro-purchases, to the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers; c. 2 CFR 200.324(a) which articulates 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; d. 2 CFR 200.327 which ensure that every purchase order or other contract made by a non-federal entity includes applicable provisions as described in Appendix II to 2 CFR Part 200, “Contract Provisions for Contracts Under Federal Awards”; and e. 2 CFR 200.318(h) which ensures that recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, proper classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. Criteria or specific requirement (including statutory, regulatory or other citation) #2: 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 119(b) - A contract may be awarded for a supply, service, or construction item without competition when, under regulations, the Chief Procurement Officer, the head of a Procurement Entity, or a designee of either officer above the head of a Procurement Entity, or a designee of either officer above the level of the Procurement Officer determines in writing that there is only one source for the required supply, service, or construction item. (b) Section 119(c) - Small Purchases. Any procurement not exceeding $50,000, or a lesser amount established by regulation, may be made in accordance with small purchase procedures promulgated in accordance with the Regulation; provided, however, that procurement requirements shall not be artificially divided so as to constitute a small purchase under this Section. (c) Section 119(d) – Emergency. Notwithstanding any other provision of this Act, the Chief Procurement Officer, the head of a Procuring Entity, 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; provided, that such emergency procurement shall be made with such competition as is practicable under the circumstances. A written determination of the basis for the emergence and for the selection of the particular contractor shall be included in the contract file. According to the College’s Procurement Code, for small purchases with federal funds ($10,000 - $50,000), price quotes from several qualified vendors must be obtained to ensure that fair price is used during procurement. 2 CFR 200.320(a)(1)(i) 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 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; (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. 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 recipient or 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). Condition #1: Key provisions from the Compliance Supplement are not covered by the College’s procurement policy. Furthermore, the College does not have policies and procedures for verifying that an entity with which the College plans to enter into a covered transaction, is not debarred, suspended, or otherwise excluded. Condition #2: Supporting procurement documentation was not sufficient to substantiate compliance with the procurement method. Cause: Key provisions from the Compliance Supplement that should be included in the College’s procurement policy were not considered when the College revised its procurement policy on September 16, 2024. Moreover, the College did not follow internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Effect or potential effect: The College is in noncompliance with applicable procurement and suspension and debarment requirements. Questioned costs: $40,350 Context: We identified and tested all five procurement transactions during the year totaling $68,048. The samples were statistically valid. For 3 (or 60%) procurement transactions tested, supporting procurement documentation was not sufficient to substantiate compliance with the procurement method. Details of samples with noncompliance are as follows: For item #s 1 and 3, there were no adequate vendor quotations on file. For item # 2, procurement was sole sourced with written justification but does not appear to be justified as item procured can be sourced from various vendors. Identification as a repeat finding, if applicable: 2023-008 Recommendation: College management should revisit its procurement policies and ensure all required provisions stated in the Compliance Supplement are covered. Responsible personnel should ensure that documentation is 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. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-009 - Reporting Identification of the federal program: Federal Agency: U.S. Department of the Interior AL No. and Title: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Criteria or specific requirement (including statutory, regulatory or other citation): Under the terms of the sub-awards administered by the RepMar under the Compact of Free Association, As Amended grant award, the College is required to submit a duly accomplished standard Form SG2 - Performance and Financial Evaluation Report. Further, the College shall maintain an acceptable financial management system during the term of the sub-award agreement, such that it will permit: a. The preparation of reports by the RepMar as required by the Public Financial Management Act (PFMA); b. The tracing of the funds to a level of expenditure is adequate to establish that such funds have been used in compliance with the provisions of the grant and applicable agreements. Such a system shall provide: i. Accurate, current and complete disclosure of the financial activity of the allocated funds; ii. Separate accounts for the grant funds appropriated; iii. Effective control over and accountability for all funds, property and other assets; iv. Comparison of actual outlays with budgeted amount pertaining to the funds appropriated; v. Consistency with all financial administration, program monitoring, performance reporting and enforcement provisions of the PFMA; and vi. Accounting records supported by source documentation. 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 recipient or 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). Condition #1: The College did not submit the required Form SG2 – Performance and Financial Evaluation final reports. Condition #2: The underlying accounting records or supporting worksheets of tested reports could not be provided. Condition #3: Expenditures reported per the Form SG2-Performance and Financial Evaluation report did not agree to quarterly expenditures reported in SEFA. Cause: The College lacks adequate internal controls over the accurate preparation and review of required reports as stipulated in the sub-award agreements. Furthermore, the College lacks adequate internal controls regarding retaining sufficient documentation to support all reported transactions. Effect or potential effect: The College is in noncompliance with applicable reporting requirements. Questioned costs: Not applicable. No questioned cost is presented as the non-compliance was related to reporting requirements. Context #1: We identified 16 Form SG2 – Performance and Financial Evaluation reports required to be submitted during the year. We tested 8 reports. The samples were statistically valid. For 3 (or 38%) reports tested, the College did not submit the required Form SG2 – Performance and Financial Evaluation final reports. Details of samples with noncompliance are as follows: Context #2: We identified 16 Form SG2 – Performance and Financial Evaluation reports required to be submitted during the year. We tested 8 reports. The samples were statistically valid. For all 8 (or 100%) reports tested, underlying accounting records or supporting worksheets could not be provided. Context #3: We identified 16 Form SG2 – Performance and Financial Evaluation reports required to be submitted during the year. We tested 8 reports. The samples were statistically valid. For 2 (or 25%) reports tested, expenditures reported did not agree to the quarterly expenditures reported in SEFA as follows: a. Compact Capital Fund - 1st to 3rd Quarter ended June 30, 2024 b. Compact Designated - 1st to 3rd Quarter ended June 30, 2024 Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: College management should strengthen controls so that required reports are accurately prepared and reviewed to provide evidence of compliance with the applicable reporting requirements and retain sufficient documentation to support all reported transactions. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-010 – Cash Management Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): The College’s Program Participation Agreement indicates that the College is placed on the Heightened Cash Monitoring (HCM) Payment Method. Based on the U.S. Department of Education (ED)’s publication, the College is placed on HCM1 Payment Method for the quarters ended December 1, 2023, March 1, 2024, June 1, 2024, and September 1, 2024. 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 Payment Method, 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. Condition: The College did not provide a complete detailed listing of expenditures supporting the drawdowns during the year. Cause: The College lacks adequate internal control policies and procedures over compliance with applicable federal regulations related to cash management requirements, specifically, monitoring actual disbursements of drawdowns. Effect or potential effect: We are unable to determine whether the College is in compliance with applicable cash management requirements. Questioned costs: Undeterminable Context: Due to the nature of the finding, we are unable to quantify the extent of noncompliance. We identified 42 cash drawdowns during the year totaling $7,296,185. The College did not provide a complete detailed listing of expenditures supporting the following drawdowns: Identification as a repeat finding, if applicable: 2023-013 Recommendation: College management should establish written policies and procedures over cash management requirements, including monitoring of actual disbursements of drawdowns. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-011 - Eligibility Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): 34 CFR 668.24(c)(1)(iii) states “The records that an institution must maintain in order to comply with the provisions of this section include but are not limited to documentation of each student’s or parent borrower’s eligibility for title IV.” 34 CFR 668.24(e)(1) states “An institution shall keep records relating to its administration of the Federal Perkins Loan, FWS, FSEOG, Federal Pell Grant, ACG, National SMART Grant, or TEACH Grant Program for three years after the end of the award year for which the aid was awarded and disbursed under those programs.” Condition: No documentation was on file to support eligibility determination. Cause: The College lacks adequate internal control policies and procedures over eligibility, including retaining documentation to support eligibility determination and accurate calculation of grant award. Effect or potential effect: The College is in noncompliance with applicable eligibility requirements. Questioned costs: $8,070 Context: We identified 1,785 participants during the year with grant totaling $7,423,174. We tested 40 participants with grant totaling $171,609. The samples were statistically valid. For two (or 5%) participants with grant totaling $8,070, documentation that determines the student’s citizenship or expected family contribution was not on file. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: The College management should improve internal control policies and strengthen controls over eligibility, specifically, retaining documentation to support eligibility determination and accurate calculation of grant award. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-012 - Reporting Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): 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 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. Student’s annual award amount reported in the Origination records does not agree with the annual award amount based on the “Disbursement Schedule for Determining Annual Awards” published by ED. 2. Student’s cost of attendance reported in the Origination records pertains to 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. Cause: The College lacks adequate internal control policies and procedures over compliance with applicable federal regulations related to reporting, specifically, the systematic review and updating of student’s origination records in COD system. Effect or potential effect: The College is in noncompliance with applicable reporting requirements. Questioned costs: Not applicable. No questioned cost is presented as the non-compliance was related to reporting requirements. Context: We identified 3,315 COD origination and disbursements records reported to the COD system during the year. We tested 60 records. The samples were statistically valid. For 9 (or 15%) origination records tested, student’s annual award amount reported does not agree with the annual award amount based on the “Disbursement Schedule for Determining Annual Awards” published by ED. For 18 (or 30%) origination records tested, student’s cost of attendance reported in the Origination records pertains to 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. Identification as a repeat finding, if applicable: 2023-014 Recommendation: College management should establish policies and procedures over reporting requirements, specifically, requiring a systematic process for reviewing and updating the student’s origination records prior to and/or after submission to COD system. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-013 - Special Tests and Provisions – Verification Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): 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. Condition: 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. Cause: The College lacks internal control over periodic review of policies and procedures related to verifying an applicant’s FAFSA information, to ensure all required provisions stated in the Criteria above are covered. Effect or potential effect: The College is in noncompliance with applicable special tests and provisions for verification requirements. Questioned costs: Not applicable. Context: Due to the nature of the finding, we are unable to quantify the extent of noncompliance. We reviewed the Student Financial Aid Policy and Procedures Manual for Academic Years 2023-2024 and 2024-2025 and noted that not all the requirements identified in the Criteria above are covered. Identification as a repeat finding, if applicable: 2023-015 Recommendation: College management should revisit its Student Financial Aid Policy and Procedures Manual and ensure all required provisions stated in the Criteria above are covered. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-014 - Special Tests and Provisions – Disbursements to or on Behalf of the Students Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): 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(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. Conditions: 1. 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. The College did not pay the credit balance to the student or parent. 3. The College did not pay the credit balance directly to the student or parent within the 14-day timeframe. Cause: The College lacks adequate internal controls over compliance with applicable special tests and provisions for disbursements to or on behalf of the students’ requirements. Effect or potential effect: The College is in noncompliance with applicable special tests and provisions for disbursements to or on behalf of the student requirements. Questioned costs: $157,494 Context: We identified 3,041 disbursement transactions during the year totaling $7,423,174. We tested 60 disbursement transactions totaling $157,494. The samples were statistically valid. For 60 (or 100%) disbursement transactions tested, noncompliance was noted as follows: a. For 60 (or 100%) disbursements 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. b. For three (or 5%) disbursements tested, the College did not pay the credit balance to the student or parent aggregating $468. c. For 35 (or 60%) disbursements tested, the College did not pay the credit balance directly to the student or parent within the 14-day timeframe. Identification as a repeat finding, if applicable: 2023-016 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. Views of responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-015 - Special Tests and Provisions – Enrollment Reporting Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): The College is required to report enrollment information under the Pell grant via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). Institutions must review, update, and certify student enrollment statuses, program information, and effective dates that appear on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. There are two categories of enrollment information, “Campus-Level” and “Program-Level”, both of which need to be reported accurately and have separate types. The Campus-Level Record data elements that ED considers to be high risk are: 1) Office of Postsecondary Education Identification (OPEID) Number; 2) Enrollment Effective Date; 3) Enrollment Status and; 4) Certification Date. The Program-Level Record data elements that ED considers to be high risk are: 1) OPEID Number; 2) Classification of Instructional Programs (CIP) Code; 3) CIP Year; 4) Credential Level; 5) Published Program Length Measurement; 6) Published Program Length; 7) Program Begin Date; 8) Program Enrollment Status and; 9) Program Enrollment Effective Date. In accordance with NSLDS Enrollment Reporting Guide July 2026, at a minimum, schools are required to certify enrollment every 60 days and respond within 15 days of the date that NSLDS sends a Roster file to the school or its third-party servicer. Any errors identified and returned by NSLDS should be corrected and resubmitted within 10 days. Condition: The College did not report the enrollment information in a manner consistent with the above Criteria. 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 or potential effect: The College is in noncompliance with applicable special tests and provisions for enrollment reporting requirements. Questioned costs: Not applicable. No questioned cost is presented as the non-compliance was related to reporting requirements. Context: We identified 890 students with status change during the year. We tested 60. The samples were statistically valid. For 37 (or 62%) students tested, the College did not report the enrollment information in a manner consistent with the above Criteria. Details of samples with noncompliance are as follows: a. For 33 (or 55%) students, the enrollment status change was not reported in NSLDS. b. For 1 (or 2%) student, enrollment status reflected in the Campus-Level Record is inaccurate. c. For 3 (or 5%) students, enrollment status change was not certified within 60 days. Identification as a repeat finding, if applicable: 2023-017 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 responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2024-016 - Special Tests and Provisions – Gramm-Leach-Bliley Act–Student Information Security Identification of the federal program: Federal Agency: U.S. Department of Education AL No. and Title: 84.063 Federal Pell Grant Program Federal Award No.: P063Q194572, P063Q204572, P063Q214572, P063Q224572, P063Q234572, P063P224572, P063P234572, P063P244572 Criteria or specific requirement (including statutory, regulatory or other citation): 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, including technical and, as appropriate, physical controls to: (i) Authenticate and permit access only to authorized users to protect against the unauthorized acquisition of customer information; and (ii) Limit authorized users' access only to customer information that they need to perform their duties and functions, or, in the case of customers, to access their own information; (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. Moreover, the College does not have written information security program that addresses all the requirements minimum elements cited in the above Criteria. Cause: There is a lack of awareness or understanding of the GLBA requirements. Effect or potential effect: The College is in noncompliance with applicable special tests and provisions for Gramm-Leach-Bliley Act–Student Information Security requirements. Questioned costs: Not applicable. Context: Due to the nature of the finding, we are unable to quantify the extent of noncompliance. We performed inquiries and walkthrough of the College’s process for complying with the special tests and provisions requirements. Based on the procedures performed, we noted that no Qualified Individual was designated and there was no written information security program that addresses all the requirements minimum elements. Identification as a repeat finding, if applicable: 2023-018 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 responsible officials: The College agrees with the finding and provides details in its Corrective Action Plan.