Finding Text
Finding 2025‐002 Special Tests and Provisions – Return of Title IV Funds Information on the federal program: Federal awarding agency: United States Department of Education (ED) Federal program: Student Financial Assistance Cluster: Federal Pell Grant Program (Pell), ALN 84.063 Federal Direct Student Loans (Direct Loans), ALN 84.268 Award year: 2024‐2025 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that a non-federal entity must (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 34 CFR section 668.173(b) requires timely return of title IV, HEA program funds. “In accordance with procedures established by the Secretary or FFEL Program lender, an institution returns unearned title IV, HEA program funds timely if – (1) The institution deposits or transfers the funds into the bank account it maintains under § 668.163 no later than 45 days after the date it determines that the student withdrew; (2) The institution initiates an electronic funds transfer (EFT) no later than 45 days after the date it determines that the student withdrew; (3) The institution initiates an electronic transaction, no later than 45 days after the date it determines that the student withdrew, that informs a FFEL lender to adjust the borrower’s loan account for the amount returned; or (4) The institution issues a check no later than 45 days after the date it determines that the student withdrew. An institution does not satisfy this requirement if – (i) The institution’s records show that the check was issued more than 45 days after the date the institution determined that the student withdrew; or (ii) The date on the cancelled check shows that the bank used by the Secretary or FFEL Program lender endorsed that check more than 60 days after the date the institution determined that the student withdrew.” Condition: The University did not provide evidence of an effective review process to ensure the timely calculation and return of Title IV funds to ED. The University did not accurately calculate and return Title IV funds in a timely manner to ED, within 45 days after the date the institution determined that a student withdrew. Cause: The University did not have effective internal controls and procedures in place over the return of Title IV funds to prevent noncompliance. Effect or potential effect: The University is not returning Title IV funds within the required time frame to ED, resulting in noncompliance. Questioned costs: $24,214 – Questioned costs were calculated based on the amount of funds not properly returned to ED. Context: We issued a material weakness related to internal control over compliance for the timely calculation and return of Title IV funds in the prior year. Based upon the planned implementation date for the corrective action of May 31, 2025 and then changed to May 1, 2026, as provided by management, the finding related to this internal control had not been remediated for the period under audit. As such, we did not test the operating effectiveness of this internal control and are issuing a material weakness consistent with the prior year finding. EY selected and tested 38 students from the population of 233 students who received Title IV funds, who withdrew during the year ended May 31, 2025. Of the 38 students selected, returns of Title IV funds were required for 26 students, with no returns required for 12 students. For 4 of the 26 students who withdrew, returns of Title IV funds were not returned to ED by the University within 45 days after the date the University determined the student withdrew. For these 4 students Title IV funds were returned to ED within a range of 81 to 142 days after the student withdrew. For 3 of the 26 students who withdrew, no returns of Title IV funds were calculated by the University and therefore no funds were returned to ED by the University. The funds required to be returned but not returned to ED totaled $24,214 for the 3 students. Total Student Financial Assistance Cluster expenditures for the year ended May 31, 2025, were $138,008,610, of which $14,477,268 were for Pell and $118,404,580 were for Direct Loans. Identification as a repeat finding, if applicable: Yes – 2024-002; 2023-002 Recommendation: The University should review and revise its internal controls and procedures surrounding the calculation and timely return of Title IV funds to ensure that the correct amount of federal student financial assistance is returned within the required time frame. Views of responsible officials: Management agrees with the finding and has developed a corrective action plan in which the Director of Financial Assistance has been working on a full review of all withdrawals during fiscal year 2023-2024 and 2024-2025 to ensure calculations were complete, accurate, and funds returned as required. The corrective action will be implemented by May 1, 2026.