Finding 1120537 (2024-001)

Finding #2024-001 Grantor: U.S. Department of Education Federal Program Name: Federal Pell Grant Program and Direct PLUS Loan Program Assistance Listing Number: 84.063 and 84.268 Criteria and Condition For students who have begun attendance and have been awarded Title VI funds, returns of Title IV funds are required to be deposited or transferred into the Student Financial Assistance (SFA) account or electronic fund transfers initiated to Secretary of Education (ED) as soon as possible, but no later than 45 days after the date the institution determines that the student withdrew. Context During our testing of the controls over the timeliness of the institution’s return of unobligated Title IV Funds, it was noted that for 2 of the 5 students selected for testing during the year ended June 30, 2024, the returned Pell Grant funds and Direct Loan funds were returned to the ED between 48-55 days after the University became aware of the student’s withdrawal from the University. The correct amount of funds were returned. Cause Programs are reconciled on a monthly basis. The identified refunds above were processed in November 2023 which followed the former reconciliation process and was before management learned on the findings for the year ended June 30, 2023. Once management learned of those findings, management implemented additional corrective procedures within the reconciliation process of Title IV funds in November-December 2023. In November 2023, the monthly draw down for Pell funds consisted of 44 students for a net total of $66,366, which included a refund for one of the students selected for $2,696. In November 2023, the monthly draw down for Direct Loan funds consisted of 378 students for a net total of $3,976,415, which included refunds for two of the students selected for $15,408. Note that one of the students had returns for both Pell funds and Direct Loan funds. Potential Effect Failure to properly administer and return funds exposes the institution to the risk of regulatory sanctions, which could include the reduction of program funding, program suspension or debarment. Questioned Costs None Recommendation It is recommended that the University implement a process whereby management reviews federal awards on a monthly basis to identify and return unobligated funds in a timely manner. This review should be formally documented and formally approved by the appropriate level of management. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and the reader’s attention is directed to the corrective action plan.