Finding Text
Finding No. 2024-001 Excess cash
Federal Program
ALN 84.268 Federal Direct Student Loans Program
Name of Federal Agency
U.S. Department of Education
Category
Other matters – C. Cash Management; N. Special test Return of Title IV Funds
Significant deficiency of internal controls over compliance
Criteria
As per the Code of Federal Regulations 34 CFR 668.166: Excess cash is any amount of FSA funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Department; or deposited or transferred to its depository account previously disbursed FSA funds received from the Department, such as those resulting from award adjustments, recoveries, or cancellations. Sometimes a school cannot disburse funds in the required three business days because of circumstances outside the school’s control.
If unusual circumstances exist, an institution may retain an excess cash tolerance for up to seven calendar days for an additional amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The school must immediately return to the Department any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the additional seven-day tolerance period.
Condition found
In nine (9) of fifty-three (53) return drawdowns from the San Juan Campus, adjustments were not properly returned on G-5, creating excess cash for more than the required period of ten (10) days (three (3) business days plus an additional seven (7) calendar days). In addition, refunds were not returned on G-5 in a timely manner during the required period of thirty (30) days.
Return date
Return
Amount
Return on
G-5 date
Days
passed
01/10/2024 $ (6,761) 03/06/24 56
01/11/2024 (6,761) 03/06/24 55
01/11/2024 (6,761) 03/06/24 55
01/16/2024 (4,948) 03/06/24 50
01/16/2024 (9,895) 03/06/24 50
01/18/2024 (6,761) 03/06/24 48
01/18/2024 (5,244) 03/06/24 48
01/22/2024 (16,656) 03/06/24 44
01/24/2024 (10,884) 03/06/24 42
$ (74,671)
Cause
Miscommunication between the finance departments and financial aid of San Juan campus. The financial aid
department communicated the adjustments in students enrollment but the finance department did not returned
the funds on time. In addition, lack of monitoring of excess of cash led to the condition.
Effect
Return of funds in G-5 took longer than the ten-day tolerance period, resulting in excess cash.
Upon a finding that an institution maintained excess cash for any amount or time over that allowed in the
tolerance provisions in paragraph (b) of section § 668.166, the actions the Secretary may take include, but are
not limited to—
(1) Requiring the institution to reimburse the Secretary for the costs the Federal government incurred in
providing that excess cash to the institution; and
(2) Providing funds to the institution under the reimbursement payment method or heightened cash
monitoring payment method described in § 668.162(c) and (d), respectively.
Questioned cost
None. The funds were returned.
Context
Total amount of funds returned that were late was $74,671 out of a total of $395,282 for the campus of San Juan. The average of days passed between disbursement date and date of return of funds was approximately 50 days.
Return of funds corresponds to adjustments in students enrollment after the drawdown of funds on G-5 system.
Identification of a repeat finding
Yes. This is an immediate repeat of prior year finding 2023-001.
Recommendation
We recommend that the University include specific processes for returning funds in its internal procedures and policies. These procedures need to include the time frame for returning funds and the personnel responsible for it. This will assist in safeguarding the timeliness and accuracy of the funds returned to the federal program. In addition to specifying time frames and responsible personnel for the return of federal funds, the University should implement a monitoring system to track these transactions and implement a system of periodic reviews that ensure the procedures remain up to date with cash management regulations.
Views of responsible officials and planned corrective actions
The University’s management agrees with this finding. Please refer to the corrective action plan on pages 60-63.