Finding Text
DEPARTMENT OF EDUCATION- Student Financial Aid Cluster MATERIAL WEAKNESS (MW) FINDING 2025-001: Special Tests and Provisions – Return to Title IV Funds Criteria: Federal regulation 34 CFR § 668.22 states that when a recipient of title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of title IV grant or loan assistance that the student earned as of the student's withdrawal date. Specific requirements include: • Calendar Days: Per 34 CFR § 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. • Calculation of the amount of title IV assistance earned by the student: Per 34 CFR § 668.22(e)(4), the unearned amount of title IV assistance to be returned is calculated by subtracting the amount of title IV assistance earned by the student as calculated under paragraph (e)(1) of this section from the amount of title IV aid that was disbursed to the student as of the date of the institution's determination that the student withdrew. • Withdrawal Date/Last Date of Attendance: Per 34 CFR § 668.22(c) and (l)(3)(i), the withdrawal date must be determined in accordance with the type of withdrawal and must reflect the student’s actual last date of attendance at an academically related activity, as documented by the institution. Condition: In a sample of twenty-five (25) students, systematically selected, subject to Return of Title IV (R2T4) requirements, we identified 6 instances where the R2T4 calculation was performed incorrectly. Specifically: • Three (3) instances involved using an incorrect total number of calendar days in the period of enrollment or payment period. • Two (2) instances involved using the incorrect Pell grant disbursed amount in the calculation. • One (1) instance involved using an incorrect withdrawal date/last date of attendance. The institution provided supporting documentation as evidence that corrections were made prior to the issuance of our report. The findings revealed a material weakness over compliance related to R2T4 requirements. Based on the number of findings, and inquiry and management assertion, we determined that the findings were pervasive to the R2T4 population and it was determined that expanding that sample would not be necessary. Management reviewed the entirety of the population and reperformed the R2T4 calculations, as appropriate. Supporting documentation was provided. Cause: The staff member previously responsible for performing R2T4 calculations retired, and the responsibility was assigned to a new employee with limited knowledge of the applicable regulations. A review process was not in place to ensure the accuracy of the calculations, which resulted in errors not being identified until they were brought to management’s attention by the auditors. Effect: As a result of the errors identified in the R2T4 calculations, the institution did not accurately determine the amount of Title IV funds earned and unearned for the affected students. The known questioned cost associated with these errors total $1,807 representing amounts of overpayment to students. Additionally, due to incorrect calculations there were underpayments to students in the amount of $1,694. Recommendation to prevent future occurrences of the deficiency identified. We recommend that the institution strengthen its controls over the R2T4 calculation process by: 1. Providing comprehensive training to staff responsible for performing R2T4 calculations to ensure understanding of regulatory requirements. 2. Implementing a formal review process whereby a second qualified individual reviews and approves all R2T4 calculations before finalization. 3. Establishing written procedures and checklists to ensure the correct number of calendar days, Pell Grant disbursement amounts, and withdrawal dates are consistently and accurately applied. 4. Periodically monitoring compliance with these procedures to identify and correct errors in a timely manner.