Finding 1175092 (2025-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2025

Accepted

2026-02-24

Audit: 388712

Organization: Loras College (IA)

Auditor: BAKER TILLY US LLP

AI Summary

Core Issue: The College violated federal regulations by offering incentive compensation based on enrollment metrics, which is prohibited under 34 CFR 668.14(b)(22).
Impacted Requirements: The lack of compliance with incentive compensation rules can lead to fines and jeopardize Title IV eligibility.
Recommended Follow-Up: Establish a formal policy for reviewing employee contracts to ensure they meet federal regulations on incentive compensation.

Finding Text

Federal Awards Findings and Questioned Costs Finding 2025-001: Significant Deficiency - Incentive Compensation Program: Student Financial Assistance Cluster Assistance Listing Number (ALN): Various Federal Agency: U.S. Department of Education Federal Award Identification Number: Various Federal Award Year: June 30, 2025 Criteria: Regulations at 34 CFR 668.14(b)(22) specify that institutions participating in Title IV federal student aid programs are prohibited from providing any commission, bonus or other incentive payment to individuals or entities based directly or indirectly on their success in securing enrollments or financial aid. The fact that enrollment is a core responsibility does not exempt the institution. Condition/Context: One out of five employees selected for testing had a promotion letter that included a salary increase if performance metrics for enrollments were met, with goal numbers for year-over-year increases in applications, admissions, new transfer enrollment and graduate enrollment. This is not in compliance with applicable requirements regarding incentive compensation. The sample was not a statistically valid sample. Cause: The College noted that the language in the specific contract was an isolated incident and also noted there was not a process in place to ensure contracts were in compliance with the incentive compensation regulations. Effect: Violations of the ban on incentive compensation can lead to the College having to pay fines and penalties or potentially limit, suspend or terminate Title IV eligibility. Questioned Costs: Not applicable. Recommendation: The College should establish a policy where employee contracts and compensation are reviewed and approved to ensure compliance with applicable requirements regarding incentive compensation per the regulations at 34 CFR 668.14(b)(22). Management's Response: The College agrees with the finding. The College believes this was an isolated incident and verified with HR that there are no others and the President is well versed in allowable incentive compensation. The College has implemented a procedure whereby all new employee contracts are reviewed by the Treasurer before they are signed by the President and Human Resources.

Corrective Action Plan

Loras College Corrective Action Plan For the year ended June 30, 2025 February 19, 2026 Finding 2025-001: Significant Deficiency – Incentive Compensation Assistance Listing Number: Various Federal Agency: U.S. Department of Education Condition: One out of five employees selected for testing had a promotion letter that included a salary increase if performance metrics for enrollments were met, with goal numbers for yearover- year increases in applications, admissions, new transfer enrollment and graduate enrollment. This is not in compliance with applicable requirements regarding incentive compensation. Recommendation: The College should establish a policy where employee contracts and compensation are reviewed and approved to ensure compliance with applicable requirements regarding incentive compensation per the regulations at 34 CFR 668.14(b)(22). Corrective Action: Management has reviewed internal processes and procedures and a process has been established whereby all employee contracts and compensation are first reviewed by the Associate VP for Finance/Treasurer and President before they are sent to Human Resources for processing. The Associate VP for Finance/Treasurer has a CPA background. In addition, the President and the HR Director are now well versed in applicable requirements regarding employee compensation. Management believes this process will eliminate a reoccurrence. Renate A. Root Treasurer 1450 Alta Vista St. Dubuque, IA 52001 563-588-7775

Other Findings in this Audit

1175087 2025-001

Material Weakness Repeat
1175088 2025-001

Material Weakness Repeat
1175089 2025-001

Material Weakness Repeat
1175090 2025-001

Material Weakness Repeat
1175091 2025-001

Material Weakness Repeat
1175093 2025-002

Material Weakness Repeat
1175094 2025-002

Material Weakness Repeat
1175095 2025-002

Material Weakness Repeat
1175096 2025-002

Material Weakness Repeat
1175097 2025-002

Material Weakness Repeat
1175098 2025-002

Material Weakness Repeat
1175099 2025-003

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
84.268	FEDERAL DIRECT STUDENT LOANS	$5.71M
84.063	FEDERAL PELL GRANT PROGRAM	$1.51M
84.038	FEDERAL PERKINS LOAN PROGRAM_FEDERAL CAPITAL CONTRIBUTIONS	$614,610
84.007	FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS	$196,904
84.033	FEDERAL WORK-STUDY PROGRAM	$149,836
84.379	TEACHER EDUCATION ASSISTANCE FOR COLLEGE AND HIGHER EDUCATION GRANTS (TEACH GRANTS)	$16,860