Finding Text
Assistance Listing, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Pell Grant Program ALN 84.063 Federal Award Identification Number and Year - Various Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303, School Districts are required to establish and maintain effective internal controls over compliance with federal statutes, regulations, and the terms and conditions of federal awards. This includes oversight of third party service providers that manage key systems used in the administration of Title IV programs. Controls over the third party service providers should include access to systems and data, change management, data backup and recovery, and system operations and monitoring. Condition - The School District relies on two third party vendors to manage key financial aid systems, including student information, eligibility determinations, disbursement calculations, and reporting. During the audit period, the institution did not perform any oversight activities or testing to verify the integrity, accuracy, or compliance of the systems managed by the vendor. There were no documented controls, service level agreements, or monitoring procedures in place. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - No questioned costs Identification of How Questioned Costs Were Computed - N/A Context - The School District utilizes two third party vendors to manage key financial aid systems. The School District relies on the controls embedded into the systems by the third party vendors; however, the School District does not perform any internal control reviews over one of the systems. Cause and Effect - The School District did not have a formal process for evaluating or monitoring third party service providers. Roles and responsibilities for oversight were not clearly defined, and there was a lack of awareness regarding federal requirements for vendor accountability. The absence of oversight and testing over third party systems increases the risk of undetected errors, data integrity issues, and noncompliance with Title IV requirements. This represents a material weakness in internal control over compliance. Recommendation - We recommend the institution establish formal oversight procedures for third party service providers managing Title IV systems. This should include documented agreements, regular performance reviews, system access controls, and periodic testing of data accuracy and compliance. Responsibilities should be clearly assigned to ensure ongoing monitoring. Views of Responsible Officials and Planned Corrective Actions - The School District agrees with the finding. The School District is implementing oversight practices for its third-party service providers, including maintaining written agreements and setting expectations for regular check-ins and performance reviews. Responsibilities for monitoring will be assigned to ensure ongoing attention to system accuracy and support needs.