Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 84.033, 84.038, 84.268; U.S. Department of Education; Student Financial Assistance Cluster
Federal Award Identification Number and Year - June 1, 2022 to May 31, 2023
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - Yes
2020-004, 2021-004, 2022-003
Criteria - An institution must ensure that its administrative procedures for the Title IV HEA programs include an adequate system of internal checks and balances (34 CFR 668.16(c)). This system, at a minimum, must separate the functions of authorizing payment and disbursing or delivering funds so that no single person or office exercises both functions for any student receiving FSA funds.
Condition - Due to the limited number of personnel within the financial assistance department, the director of financial assistance is solely responsible for packaging, awarding, and disbursing to student accounts federal student financial assistance (Title IV) as well as calculating return of Title IV funds for students who withdraw from the School to student accounts. The packaging of Title IV assistance and the return of Title IV funds are complex calculations that are not formally reviewed by another employee.
Questioned Costs - None
Context - During our discussions with management and through review of supporting documentation of the audit, we noted the director of financial assistance is solely responsible for packaging and awarding Title IV assistance, as well as calculating and determining return of Title IV funds for students who withdraw from the School.
Cause and Effect - The School currently does not have a process in place to sufficiently segregate duties within its financial assistance department. Nor does it have compensating controls in place to mitigate the risks of the lack of segregation of duties.
The financial assistance director can unilaterally package, award, and disburse Title IV assistance to student accounts and calculate and refund return of Title IV funds to student accounts. This increases the risk that noncompliance with federal regulations, questioned costs, inaccuracies, and improprieties could occur and not be detected on a timely basis.
Recommendation - We recommend the School implement adequate segregation of duties within the financial assistance department. If segregating duties within the financial assistance department is not practical, we recommend that management implement controls to ensure that actions unilaterally performed by one individual are reviewed by another knowledgeable individual. Evidence of such review should be documented and maintained.
Views of Responsible Officials and Planned Corrective Actions - There is no disagreement with the audit finding. The Iliff School of Theology has contracted with a professional, third party processing company to administer its student assistance programs. This third party processing company is structured to properly segregate financial processing and includes a quality review function.