Finding Text
Finding 2024-001 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (material weakness): Information on the federal program – Federal Pell Grant Program, FAL No. 84.063, June 30, 2024; Federal Supplemental Opportunity Grant Program, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024; Federal Direct Student Loan Program, FAL No. 84.268, June 30, 2024 a) Satisfactory Academic Progress (SAP) Criteria – An institution must establish a reasonable satisfactory academic progress policy for determining whether an otherwise eligible student is making satisfactory academic progress in his or her educational program and may receive assistance under the Title IV, HEA programs. 34 CFR 668.34. Condition – We observed that 11 out of 60 students did not meet Satisfactory Academic Progress (SAP) for the academic year. The College did not provide supporting documentation for successful appeals and allowed the students to receive Title IV, student financial aid funding. Cause – SAP was not properly monitored during the year by responsible persons. This appears to have been an oversight. Effect – Ineligible students may have received Title IV federal student financial aid. Questioned Costs – $182,944. Perspective – Total students receiving Federal student financial aid was 498. This is considered a systemic problem given the 11 exceptions noted from the sample of 60 students. Repeat Finding – No. Auditor's Recommendation – The College should evaluate all students at least annually to ensure they meet satisfactory academic progress. The frequency of the evaluation should be consistent with approved policies and procedures. This prevents ineligible students from possibly receiving Title IV federal student financial aid. b) Federal Work-Study Timesheet Documentation Criteria – Regardless of who employs the student, the institution is responsible for ensuring that the student is paid for work performed. 34 CFR 675.16. Condition – Nine (9) of the 10 students tested for Federal Work-Study Program payroll had missing and/or incomplete timesheets. Cause – The College did not properly review timesheets and either failed to obtain or misplaced timesheets documenting the hours worked to support compensation paid to students under the Federal Work-Study Program. Effect – Students may have been over or underpaid compensation based on hours actually worked. Questioned Costs – Federal Work-Study Program, FAL No. 84.033: $17,882. Perspective – There were 137 students participating in the Federal Work-Study program. This is considered a systemic problem given the nine (9) exceptions noted from the sample of 10 students. Repeat Finding – No. Auditor's Recommendation – All timesheets should be reviewed and approved by the direct supervisor overseeing the student’s work before any Federal Work-Study wages are disbursed. Approved timesheets should then be systematically organized and securely retained to document compliance with federal requirements. c) Timely Return of Title IV (R2T4) Funds Criteria – The institution must determine the portion of aid the student earned and the portion that is unearned at the time of withdrawal. Any unearned portion of Title IV funds must be returned to the U.S. Department of Education as soon as possible but no later than within 45 days after the confirmed date of withdrawal. HEA, Section 484B & 34 CFR 668.22. Condition – Six (6) of the 10 students tested for withdrawals and the return of Title IV funds did not have their Title IV program funds returned within the 45-day requirement. All funds were subsequently returned. Cause – The College did not adequately track student withdrawals during the year, particularly those students who unofficially withdrew. Effect – USDE may assess liabilities or require reimbursement of funds. Further, federal funding could be reduced or the College placed on heightened cash monitoring. Questioned Costs – Federal Direct Student Loan Program, FAL No. 84.268: $21,491. Perspective – There were 12 official and 30 unofficial withdrawals in fiscal year 2024. This is considered a systemic problem given the six (6) exceptions noted from the sample of 10 students. Repeat Finding – No. Auditor's Recommendation – The College must strengthen its procedures for monitoring and documenting student withdrawals by consistently adhering to its established policies. This applies to both official and unofficial withdrawals to ensure accurate identification of withdrawal dates and the timely calculation and return of Title IV funds in accordance with federal regulations. d) Entrance and Exit Counseling Documentation Criteria – Institutions participating in the Federal Direct Loan Program must ensure that entrance and exit counseling is conducted for all applicable student borrowers. 34 CFR 685.304. Condition – Entrance and exit counseling documentation was not provided for first time borrowers, withdrawn students or graduated students. Cause – The College did not exercise adequate oversight to ensure that required entrance and exit counseling for borrowers was properly conducted and documented. Internal controls over this process were either insufficient or not fully implemented. Additionally, staff turnover within the Student Financial Aid Office contributed to lapses in compliance and continuity of procedures. Effect – Failure to counsel students could adversely affect the College’s loan default rate and cause the College to lose its eligibility to participate in Title IV programs. Questioned Costs – Unknown. Perspective – Total students receiving Federal student financial aid was 498. No documentation was available to determine a sample size for first-time borrowers or graduating students. Withdrawals totaled 42. This is considered a systemic problem since no entrance or exit documentation was provided. Repeat Finding – No. Auditor's Recommendation – The College should establish and implement comprehensive policies and procedures governing entrance and exit counseling for all borrowers. These procedures will help ensure that borrowers receive required education on their loan obligations, the personal consequences of default, and the potential impact of borrower defaults on the College’s federal compliance standing. e) Cost of Attendance Budget Documentation Criteria – Institutions must determine a student’s financial need by subtracting the expected family contribution and estimated financial assistance from the cost of attendance. 34 CFR 668.2 and 34 CFR 637.5(a). Condition – The College did not provide Cost of Attendance (COA) budgets to determine students’ unmet need. Cause – The condition occurred because the College lacked adequate internal controls and documentation procedures to ensure that COA budgets were consistently established, retained, and applied during financial aid packaging. Effect – There is a risk of overawards or improper disbursements of federal funds to ineligible students which could result in repayment liabilities. Questioned Costs – Total Federal Title IV Student Financial Aid awarded to the 60 students in our sample was $898,252. Perspective – Total students receiving Federal student financial aid was 498. This is considered a systemic problem since the College was unable to produce the COA budget for the sample of 60 students. Repeat Finding – No. Auditor's Recommendation – Internal controls should be strengthened or implemented to ensure a COA budget is established annually and need is calculated for each student to avoid noncompliances with federal regulations. A periodic review of the COA budget should be done to determine whether budget amendments are needed. f) Fiscal Operations Report and Application to Participate (FISAP) Reporting Criteria – Institutions must maintain records supporting the accuracy of FISAP data. 34 CFR 675.19(b)(3) and 34 CFR 676.19(b). Condition – The Office of Financial Aid submitted unreconciled expenditures within the Fiscal Operations Report and Application to Participate (FISAP) for Federal Pell Grant, Federal SEOG and Federal Work-Study. Cause – The College did not perform Title IV student financial aid reconciliations consistently throughout the year. Effect – Errors or inaccuracies in FISAP reporting can cause the USDE to misallocate campus-based program funds in future award years, which may result in the institution being required to return overawarded funds and could affect future funding eligibility. Questioned Costs – Total variances for those programs were $23,904. Perspective – This is considered a systemic problem as it appears the Title IV reconciliations were not consistently performed during the award year. The FISAP for the award year ended June 30, 2024 was selected for testing. Repeat Finding – No. Auditor's Recommendation – The Business Office and Student Financial Aid Office should establish a coordinated process to meet at least monthly to reconcile all student financial aid disbursements. Incorporating this reconciliation into the College’s regular closeout procedures will strengthen internal controls and enhance the accuracy of financial data submitted through the FISAP. g) Title IV Reconciliations Criteria – Title IV funds are generally required to be reconciled at least monthly. 34 CFR 675.19(b)(2)(iv), 34 CFR 676.19(b)(2) and CFR 685.300(b)(5). Condition – The College did not reconcile all Title IV programs between the Office of Financial Aid and the Business Office including Federal Pell Grant, Federal SEOG, Federal Work-Study and Federal Direct Loans. Cause – The two offices have not implemented procedures to coordinate the reconciliations on a monthly basis. Effect – Not performing reconciliations on a routine basis increases the risk of student overawards or underawards, federal cash management noncompliance, and inaccurate reporting. These issues can lead to repayment liabilities, reduced future funding allocations, and may call into question the College’s administrative capability under Title IV regulations. Questioned Costs – Total variances were $41,845. Perspective – This is considered a systemic problem as it appears the Title IV reconciliations were not consistently performed during the award year for any of the SFA programs. Repeat Finding – No. Auditor's Recommendation – The Business Office and Student Financial Aid Office should establish a coordinated process to meet at least monthly to reconcile all student financial aid disbursements to avoid adverse consequences.