Finding Text
Finding 2025-003 – Student Financial Aid - Excess Cash (Significant Deficiency) Repeat Finding: No Federal Agency – U.S. Department of Education (ED) Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Years: Year Ended May 31, 2025 Condition During our cash management testing, we identified that Lake Forest College had excess cash for the FDL program ranging from $24,903 to $3,683,698 during the period of January 30, 2025 through February 7, 2025. In this situation, the excess cash exceeded one percent of total prior year drawdowns, and the amount was not returned within a seven-day period. Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed Title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs Questioned costs is the amount that exceeded one percent of total prior year drawdowns. Excess cash ranged from $24,903 to $3,683,698. Cause The College drew down funds in advance of the Spring semester which is allowed based on the College’s cash management method. However, due to timing differences, the funds were not ultimately disbursed to students until 8 days after the drawdown was made. Context One instance of excess cash during the fiscal year. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding. Untimely reconciliation of federal awards can result in over or under awarding of funding and result in heightened monitoring by the Department of Education. Recommendation We recommend the College review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of Responsible Officials We agree with this finding. See corrective action plan.