Finding Text
2024-001 Reporting (Financial)
Student Financial Assistance Cluster:
U.S. Department of Education
Federal Direct Student Loans (ALN 84.268)
Federal Grant Numbers and Years: P268K240460 (9/1/2023-8/31/2024)
Statistically Valid Sample: No, and it was not intended to bePrior Year Finding: Not a repeat finding.
Finding Type: Material Weakness and Noncompliance
Criteria:
SFA – Title IV Programs
Institutions submit Direct Loan, Pell Grant, TEACH Grant, and IASG origination records and disbursement records to the Common Origination and Disbursement (COD) system. Origination records can be sent well in advance of any disbursements, as early as the institution chooses to submit them for any student the institution reasonably believes will be eligible for a payment. An institution follows up with a disbursement record for that student no earlier than (1) seven calendar days prior to the disbursement date under the Advance or Heightened Cash Monitoring 1 payment methods, or (2) the date of the disbursement under the Reimbursement or Heightened Cash Monitoring 2 Payment Method (see Federal Register, Volume 86, Number 119, June 24, 2021). The disbursement record reports the actual disbursement date and the amount of the disbursement. ED processes origination and/or disbursement records and returns acknowledgments to the institution. The acknowledgments identify the processing status of each record: Rejected, Accepted with Corrections, or Accepted. In testing the origination and disbursement data, the auditor should be most concerned with the data ED has categorized as accepted or accepted with corrections. Institutions must report student disbursement data within 15 calendar days after the institution makes a disbursement or becomes aware of the need to make an adjustment to previously reported student disbursement data or expected student disbursement data. Institutions may do this by reporting once every 15 calendar days, bi-weekly or weekly, or may set up their own system to ensure that changes are reported in a timely manner.
Key items to test on origination records, if applicable, are: Social Security number, award amount, enrollment date, verification status code (when the applicant is selected for verification), transaction number, cost of attendance, and the “Academic Start Date” and “Academic End Date”. Key items to test on disbursement records are disbursement date and amount.
Further, the College must establish and maintain effective internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program.
Condition and Context:
During our testing of the timeliness of reporting of disbursement data, we noted the following: For 5 out of 40 students selected for testwork, the College did not report student disbursement data within the required 15 days after making a disbursement to the student’s account. For each of the students selected for testwork above, the students’ institutional records information agreed to the COD system. Upon further review of the root cause for the late reporting, the College determined that a total 785 student disbursement data records were reported late to COD (2 students – 1 day late, 5 students – 2 days late, 22
students – 4 days late, 740 students – 5 days late; 14 students – 11 days late, 1 student – 12 days late, and 1 student – 43 days late). We did not note any discrepancies with the key line items noted above related to the origination and disbursement records, respectively, with our sample subjected to testwork.
Cause:
Certain student disbursement data records were not reported and/ or updated in COD and the College’s processes and procedures did not identify the issue until after the required 15 calendar days review period had passed.
Effect:
The College did not report student disbursement data within the required 15 calendar days after the College made a disbursement.
Questioned Costs:
No questioned costs were noted as a result of the audit procedures performed.
Recommendation:
We recommend that the College review and enhance its current policies and proceduers to ensure that all students’ disbursement data is reported to COD within the 15 calendar day required deadline.
Views of Responsible Officials:
Management agrees with the finding.