Finding Text
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.063 – Federal Pell Grant Program 84.268 – Federal Direct Loans
84.007 – Federal Supplemental Educational Opportunity 84.268 – Federal Direct Loans
84.007 – Federal Supplemental Educational Opportunity Grants 84.033 – Federal Work Study Program Federal Award Identification Number and Year: P063P210355 - 2023, P268K220355 - 2023, P007A213474 - 2023, P033A213474 - 2023
Award Period: July 1, 2022 to June 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matter
Criteria or specific requirement: An institution may enter into an arrangement with a servicer or a financial institution to make a direct payment of FSA credit balances to students through electronic funds transfer to a bank account designated by a student or parent, to issue a check payment to the student or to use an access device such as a debit, demand, or smart card provided by the servicer or its financial partner. Regulations at 34 CFR 668.164(e) and (f) establish two different types of arrangements between schools and financial account providers: Tier One arrangements and Tier Two arrangements. The type of arrangement determines the provisions that are applicable to the school. Additional guidance on Tier One and Tier Two arrangements can be found in Dear Colleague Letter GEN-22-14; Volume 4, Chapter 2 of the FSA Handbook; and the Cash Management Q&A. These schools must take affirmative steps, by way of contractual arrangements with the third-party servicer as necessary, to ensure that requirements for these arrangements are met with respect to all accounts offered pursuant to the arrangement (34 CFR 668.164(e)(2)(x) and (f)(4)(ix)). In addition, per Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements.
Condition: During our testing, we noted that the College did not post required third-party servicer information to the website, nor did they provide the URL for the contract or cost information to ED. Questioned Costs: None
Context: During our testing of 8 out of 32 students who have an account with the College’s third-party servicer, we noted the College did not post the third-party servicer's contract to the website, nor did they provide the URL for the contract to ED. Additionally, the required cost information was not on the website, nor was it updated within 60 days after the end of the award year, nor was the URL for the cost information provided to ED.
Cause: The College did not have procedures in place to ensure that all requirements were being met.
Effect: The College did not meet disclosure requirements of a Tier One arrangement with a third-party servicer.
Repeat Finding: No.
Recommendation: We recommend the College implement procedures to ensure all requirements of a Tier One arrangement for a third-party servicer are being met.
Views of responsible officials: There is no disagreement with the audit finding.