Finding 1103194 (2024-003)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2025-03-12
Audit: 345754
Auditor: Cwdl

AI Summary

  • Core Issue: The institution has a significant deficiency in internal controls, leading to overpayments of student financial aid due to failure to adjust for changes in enrollment.
  • Impacted Requirements: Compliance with 2 CFR 200.303 is lacking, as effective internal controls are not in place to ensure proper management of federal awards.
  • Recommended Follow-Up: Review and improve processes for tracking student enrollment changes to ensure financial aid disbursements align with current enrollment status, preventing future overpayments.

Finding Text

FINDING #2024-003 – INTERNAL CONTROLS OVER FEDERAL AWARDS Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.303, nonfederal entities 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 statutes, regulations, and the terms and conditions of the Federal award. Condition / Context: During our audit procedures, we noted instances where students are overpaid student financial aid due to changes in student units. The amounts reported to the Common Origination and Disbursement system were correctly reported resulting in the overpayment being disbursed from the District’s funds. The District is paying students based on census enrollment and not adjusting for any changes in enrollment. Questioned Costs: None. Cause: Inadequate controls over student information changes allowing the institution to identify changes in enrollment and adjust financial aid accordingly. Effect: Overpayment by the District where the District must use funds from the General Fund to cover the overpayment. Repeat Finding: Yes. Recommendation: We recommend the institution review its processes over student information changes and ensure that students are being awarded the proper amount of financial aid based on enrollment at the time of disbursement to prevent having to cover overpayments through the General Fund. Corrective Action Plan: These initial Pell overpayments were incurred in the “early” Pell disbursements that occurred a week before the semester started and the first two weeks of the semester. The enrollment was reported correctly, but part of the issue was the current FA system (SAM) was not programmed to adjust the amount disbursed based on the student’s current enrollment at the time of disbursement. For the Spring 2024 semester, testing was done on SAM to disburse aid based on current enrollment for the early Spring 2024 disbursements. This change reduced the amount in overpayments if students drop below ½ time for the semester, or withdrew completely. In addition, the Financial Aid Office transitioned from SAM to the Colleague Financial Aid System (starting in 2024-25). Colleague is already programmed to disburse aid based on current enrollment status, so this will not be a recurring issue in the future. Early Disbursement and Overpayment Notes: • For Fall 2023 semester, the first early Pell disbursement was based on 25% of a student’s semester award based on full-time enrollment. If a student is currently enrolled ½-time or higher when this disbursement is processed, they will receive the 25% award amount. If a student is enrolled in less than ½-time status (.5 units to 5.5 units), they will receive a $500 Pell disbursement to account for the lower Pell grant award for less than ½-time students. • For Spring 2024 semester, after testing in SAM, we were able to disburse the early disbursements based on the current enrollment before Census which lowered the overpayment amount significantly. • We understand students add/drop courses through the first two weeks of the semester. The final Pell grant award for the semester is adjusted to the student’s enrollment status on Census day. Students who are ½-time or higher at Census will not be a Pell overpayment for the semester since their Pell grant award will be at 50% or higher. • For students who were enrolled at ½-time or higher at the time the early disbursement was processed, but then dropped to less than ½-time or withdrew completely by Census day, they will be considered a Pell overpayment. o These types of overpayments are unavoidable. o Example: Currently, if a student is scheduled a $500 disbursement for the early 25% disbursement, and is enrolled ½ time, they will receive $500. With the change to actual enrollment (1/2 time for this case), the student will receive $250 instead of $500. If the student drops below 1/2-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.

Categories

Student Financial Aid Matching / Level of Effort / Earmarking Significant Deficiency

Other Findings in this Audit

  • 526752 2024-003
    Significant Deficiency Repeat
  • 526753 2024-004
    Significant Deficiency Repeat
  • 1103195 2024-004
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
84.063 Federal Pell Grant $31.81M
84.268 Direct Loans $2.95M
21.027 State Fiscal Recovery Funds $2.04M
84.425 Covid-19 Heerf III Minority Serving Institutions $1.08M
84.048 Cte Perkins Ic $765,902
93.069 California Dept. of Public Health Bi National Border $598,905
84.007 Federal Supplemental Education Opportunity $552,346
93.600 Headstart $455,550
93.658 Foster Care Education (federal & State) $332,042
64.000 Veteran's Resource Center Allocation $308,650
84.066 East County Educational Opportunity Center (trio) $165,495
84.425 Covid-19 Heerf III Institutional Portion $158,068
84.048 Cte Ib Jspac $148,149
93.558 Tanf $133,935
84.033 Federal Work Study $100,871
84.007 Financial Aid Administrative Allowance $63,316
10.558 Childcare Food Program $52,348
93.600 Covid-19 Head Start - Arp Funds $5,323
64.000 Veteran's Education $4,851
93.600 Covid-19 Head Start - Crrsaa Funds $1,263