Finding Text
Criteria
When Direct Loans or TEACH funds are being credited to a student’s account, the institution must notify
the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student’s right, or
parent’s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds
returned to the holder of that loan or the TEACH Grant payments returned to ED; and (3) the procedure
and time by which the student or parent must notify the institution that he or she wishes to cancel the loan,
TEACH Grant, or TEACH Grant disbursement (a minimum of 14 or 30 days depending on the confirmation
process). Institutions that do not implement an affirmative confirmation process (as described in 34 CFR
668.165 (a)(6)(i)) must notify a student no earlier than 30 days before, but no later than seven days after,
crediting the student’s account and must give the student 30 days (instead of 14) to cancel all or part of the
loan.
Title 2 U.S. Code of Federal Regulations Part 200 (2CFR 200) Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards, section 303(a) states, the non-Federal entity must
establish and maintain effective internal control over the Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations,
and the terms and conditions of the Federal award. These internal controls should be in compliance with
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
During our testing of student loan disbursement notifications, KPMG identified that four of forty students
selected for testwork received notifications beyond seven days after the students’ accounts had been
credited.
The exceptions described above did not result in changes to the amounts awarded or disbursed to students
by the College for the current fiscal year.
Cause
The condition resulted from the College’s internal control processes not operating consistently to ensure
that all disbursement notifications were made in a timely manner. Specifically, the College has
implemented an automated process to send disbursement notifications on a routine basis using student or parent contact information that is maintained in the system. However, in instances where these automated
disbursement notifications came back as undeliverable due to inaccuracies in contact information
(exceptions), the College did not implement effective internal control processes to ensure that these
exceptions were resolved within the requisite timeframe.
Possible Asserted Effect
Failure to notify students of the timing of disbursements, as well as timely notifying students of their rights
related to those disbursements and the procedures and timelines for cancellation, could have resulted in
students not being aware that a disbursement was made or receiving loans that they did not intend to keep.
Questioned Costs
None.
Statistical Sampling
The sample was not intended to be, and was not, a statistically valid sample.
Identification of Whether the Audit Finding was a Repeat Finding
This is not a repeat finding.
Recommendation
We recommend that the College review and enhance its processes related to disbursement notifications to
ensure that they are complying with federal requirements.
Views of Responsible Officials
Management concurs with the recommendations provided. To remediate this issue, there are new
personnel assigned to complete the process and ensure there are no gaps. The Director of Financial Aid
Operations will ensure that the process is run timely.
Berklee has changed the notification date to align with the disbursement date. This will ensure that notices
are sent on day zero. In addition, errors are reviewed and addressed within two business days.
Estimated Date of Completion: March 31, 2025