Finding 1161384 (2024-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-10-24

AI Summary

  • Core Issue: The Organization failed to meet the minimum financial responsibility standards set by the U.S. Department of Education for the 2024 fiscal year.
  • Impacted Requirements: This finding highlights a material weakness in compliance with the Special Tests and Provisions related to administrative capability under Title IV of the Higher Education Act.
  • Recommended Follow-Up: The Organization should closely monitor its financial responsibility ratios and implement corrective actions as outlined in the management's response.

Finding Text

FINDING 2024-002: FINANCIAL RESPONSIBILITY FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION PROGRAM NAME: FEDERAL DIRECT LOAN PROGRAM ALN#: 84.268 FEDERAL AWARD YEAR: 2023-2024 & 2024-2025 Compliance Requirement: Special Tests and Provisions (N.) - Administrative Capability Criteria: An accredited school that participates in Federal programs authorized by Title IV of the Higher Education Act of 1965 is required to demonstrate minimum standards of financial responsibility set forth by the U.S. Department of Education (DOE). Condition: The Organization did not meet the minimum Composite Score set forth by the U.S. Department of Education for the year ended December 31, 2024. We consider this finding to be a material weakness. This finding is repeated and was reported in the prior year as Finding 2023-002. Cause: The Organization showed an operating loss for the year. Effect: The Organization will be required to adhere to additional stipulations until such ratios are met. Recommendation: The Organization needs to monitor its financial responsibility ratios throughout the year. Views of Responsible Officials: Management agrees that the ratios were not met and a response is included in the Corrective Action Plan.

Corrective Action Plan

FINDING 2024-002: Financial Responsibility Comments on Finding and Recommendation: The College agrees with this finding as determined in the audit and states that the College had a net reduction in student enrollments and had incurred additional expenses as it operated and maintained the rent at two separate locations within Florida. The College incurred additional losses in tuition revenue and services revenue as it restructured how to operate both locations appropriately during 2024 while incurring additional costs as the previous entrenched management was moved out. Additionally the previous board had chosen to continue to push debt into following semesters, impacting each semester's ability to produce a profit. Actions Taken or Planned: The College acted in 2024 and 2025 to increase enrollment through, targeted advertising, bringing on a Director of Marketing and Media relations, examining the curriculum to remove waste and elevate the quality of education, changing the vision and mission statement, in 2025 requesting the Foundation investigate and remove the inactive Governing board who was engaging in practices furthering the school's financial difficulties. This has all led to a steady increase in the student population. Additional changes have been made to the program including recruitment criteria all leading to DRCOM quickly becoming a leader in East Asian medical education. While other colleges are closing DRCOM continues to experience growth. While reporting the Gainesville FL location as no longer offering instruction, but maintaining a clinical facility to allow - 15 - students to complete the requirements of their academic program in 2024 and 2025. The College also removed and replaced the Executive Director and other members of administration that contributed to the financial issues faced by the College.

Categories

Student Financial Aid Special Tests & Provisions Material Weakness

Other Findings in this Audit

  • 1161385 2024-003
    Material Weakness Repeat
  • 1161386 2024-004
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.268 FEDERAL DIRECT STUDENT LOANS $1.16M