Finding Text
Federal Programs: Student Financial Assistance Cluster • Federal Direct Student Loans (ALN 84.268) • Federal Pell Grant Program (ALN 84.063) Federal Agency – U.S. Department of Education Federal Award Year – January 1, 2024 to December 31, 2024 Compliance Requirement - Special Tests and Provisions – Disbursements to or on behalf of students Criteria Requirement: Per the Uniform Guidance, when Title IV funds are credited to a student account and they exceed the amount of tuition and fees, room and board, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after: (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. An institution is permitted to hold credit balances if it obtains a voluntary authorization from the student. Regardless of any authorization obtained by the institution, the institution must pay any remaining loan balance by the end of the loan period and any other remaining Title IV funds by the end of the last payment period in the award year for which the funds were awarded. Condition Found: For 15 out of 47 students selected for testwork, the Title IV funds credited to the student resulted in a credit balance owed to the student. The institution did not refund the credit balances back to the student for more than a period of 14 days and did not obtain proper authorization from the student to retain the balance. The delay in repayment ranged from 18 to 83 days. Cause and Possible Asserted Effect: This is a repeat finding from the prior year. As such for the Spring semester, management did not yet design and implement a control to address the findings. Therefore, this resulted in continued failure by the institution to make payments to the students within the 14-day timeframe required by the Department of Education and did not obtain voluntary authorization from the student to retain the credit balances for the Spring semester. Therefore, this evidenced the lack of an appropriately designed control by the institution to ensure credit balances are refunded to students within the timeframe requirements. Identification of Questioned Costs: There are no questioned costs related to this finding. All credit balances were appropriately refunded by the end of the semester and therefore there were no questioned costs or misstatements that occurred as it relates to the SEFA or financial statements. Sampling: The sample was not intended to be and was not a statistically valid sample. Identification of Repeat Finding: This audit finding is a repeat of finding 2023-002 in the immediately prior year. Recommendation: Our recommendation is for management to design and implement a control in order to ensure the compliance requirement objectives are met. In particular, it is advised to implement a system of control within the institution for refunds of credit balances to be paid to students within the 14-day timeframe. Further, management should reinforce and provide training to individuals responsible for compliance control ownership. This will help ensure that there are controls in place to ensure compliance and control ownership is established, thereby preventing or promptly identifying and rectifying instances of noncompliance and ensuring the controls operate as designed. Views of Responsible Officials: The College agrees with the recommendation provided and remediated the finding for the Fall semester such that there was no further noncompliance. The College has performed a full review of processes and controls related to credit-balance payments within 14-days to ensure accuracy moving forward.