Finding 10437 (2023-004)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-01-29

AI Summary

  • Core Issue: The District failed to return uncashed Title IV checks to the Department of Education within the required 240-day timeframe, leading to a material weakness in internal controls.
  • Impacted Requirements: Compliance with 34 CFR 668.164 and 2 CFR 200.303 regarding timely return of funds and maintaining adequate internal controls.
  • Recommended Follow-up: The District should re-evaluate procedures for processing and documenting outstanding Title IV funds to ensure compliance and prevent future issues.

Finding Text

2023-004: 240 Days Outstanding Check Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: Various Federal Award Identification Number and Year: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 668.164 states that an institution must return to the Department of Education, any Title IV funds that it attempts to disburse directly to a student or parent that are not received by the student or parent. If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Department of Education before the end of this 45-day period. If a check is sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Department of Education no later than 240 days after the date it first issued the check. In addition, 2 CFR 200.303, nonfederal 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: Our audit identified checks were being cancelled within the 240-day timeframe, however the District was not able to provide support that the Department of Education’s Common Origination and Disbursement (COD) website was being updated within the allowable timeframe. Questioned Costs: Unknown. Context: The District disbursed $9,065,178 in Title IV awards during fiscal year 2022-23. The District provided a population of 1,076 checks outside the 240-day timeframe, totaling $958,167. However, we were unable to obtain actual questioned costs, as the population provided by the District included cancelled and reissued checks, resulting in duplication with the population. Cause: The District's existing procedures do not provide sufficient documentation to support compliance with Title IV regulations Effect: The District was unable to establish compliance with the Title IV regulation. Repeat Finding: Yes, see Finding 2022-005. Recommendation: We recommend the District re-evaluate their procedures for processing and documenting outstanding Title IV funds to the Department of Education. Views of responsible officials: Management concurs with the finding and plans to correct the finding.

Corrective Action Plan

2023-004: 240 Days Outstanding Check Recommendation: We recommend the District re-evaluate their procedures for processing and documenting outstanding Title IV funds to the Department of Education. Action taken in response to finding: This issue is the result of a conflict between the procedures used by the awarding team (Financial Aid) and the disbursement team (Fiscal Services). The Financial Aid team was operating with a set of pre-pandemic instructions that had them contact students to fix their address information (the typical reason that disbursements timeout) and send a list of students with verified addresses to Fiscal Services for reissuing. Nothing in their procedures mentioned the need to rescind aid—only the need to verify addresses to allow funds to reach students. The Fiscal Services team’s procedures, on the other hand, assumed the Financial Aid team was rescinding aid as necessary and thus would reissue repeatedly as long as the funds remained awarded in the school’s information system, even in cases where the initial disbursement had been made more than 240 days prior. The combination of these two procedures led to the findings in this year’s audit and last year’s audit, as well. The Financial Aid team’s procedures were updated and presented to the team on October 4, 2023. These new procedures included:  Directions on how to rescind funds  A policy statement requiring recission when the time since first disbursement has exceeded 90 days (an institutional policy that is stricter than the 240 days allowable under federal regulations)  A clear set of instructions on how to make the determination to rescind funds. Name of the contact person responsible for corrective action: Patrick Scott, Dean – Financial Aid Planned completion date for corrective action plan: October 2023 for procedure correction. February 2024 for completed review of affected students in audit list.

Categories

Student Financial Aid Material Weakness Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 10428 2023-001
    Significant Deficiency
  • 10429 2023-002
    Significant Deficiency
  • 10430 2023-002
    Significant Deficiency
  • 10431 2023-002
    Significant Deficiency
  • 10432 2023-002
    Significant Deficiency
  • 10433 2023-003
    Significant Deficiency
  • 10434 2023-003
    Significant Deficiency
  • 10435 2023-003
    Significant Deficiency
  • 10436 2023-003
    Significant Deficiency
  • 10438 2023-004
    Material Weakness Repeat
  • 10439 2023-004
    Material Weakness Repeat
  • 10440 2023-004
    Material Weakness Repeat
  • 10441 2023-005
    Material Weakness
  • 10442 2023-005
    Material Weakness
  • 10443 2023-005
    Material Weakness
  • 10444 2023-005
    Material Weakness
  • 10445 2023-006
    Significant Deficiency
  • 586870 2023-001
    Significant Deficiency
  • 586871 2023-002
    Significant Deficiency
  • 586872 2023-002
    Significant Deficiency
  • 586873 2023-002
    Significant Deficiency
  • 586874 2023-002
    Significant Deficiency
  • 586875 2023-003
    Significant Deficiency
  • 586876 2023-003
    Significant Deficiency
  • 586877 2023-003
    Significant Deficiency
  • 586878 2023-003
    Significant Deficiency
  • 586879 2023-004
    Material Weakness Repeat
  • 586880 2023-004
    Material Weakness Repeat
  • 586881 2023-004
    Material Weakness Repeat
  • 586882 2023-004
    Material Weakness Repeat
  • 586883 2023-005
    Material Weakness
  • 586884 2023-005
    Material Weakness
  • 586885 2023-005
    Material Weakness
  • 586886 2023-005
    Material Weakness
  • 586887 2023-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.063 Federal Pell Grant Program $7.58M
84.425 Covid-19 Heerf - Institutional $1.95M
84.268 William D. Ford Direct Loan Program $1.17M
84.048 Perkins Title I-C (basic Grants to States) $333,414
84.007 Federal Supplemental Educational Opportunity Grants $174,774
84.033 Federal Work-Study Program $143,187
93.658 Foster-Kinship Care Education $74,141
93.558 Temporary Assistance for Needy Families $46,069
64.028 Veteran Assistance Title 38 $1,949
21.027 Covid-19 Sfrf Emergency Financial Assistance $1,754