Finding Text
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: The College did not provide the URL for the contract or cost information to the Department of Education.
Questioned Costs: None
Context: The College did not meet the compliance requirement to report the URL for the contract and cost information to the Department of Education.
Cause: The College did not have proper procedures in place to ensure that all requirements were being met.
Effect: The College is not in compliance with disclosure requirements of a Tier One arrangement with a third-party servicer.
Repeat Finding: Yes, Prior year finding 2023-006.
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.