Finding Text
Finding 2025‐004 – Special Tests and Provisions – Disbursements to or on Behalf of Students 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, Assistance Listing No. 84.268 Award years: 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). When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. An institution is permitted to hold credit balances if it obtains a voluntary authorization from the student. Regardless of any authorization obtained by the institution, the institution must pay any remaining loan balance by the end of the loan period and any other remaining Title IV funds by the end of the last payment period in the award year for which the funds were awarded. Condition: The University was unable to provide evidence that internal controls over the return of credit balances to students were performed. Additionally, student credit balances were not identified and refunded to students within 14 days after the credit balance occurred. Cause: The evidence of the internal control over student credit balances includes credit balance reports received through the reporting tool, Argos, through email. The University indicated an issue with Outlook caused the emails to be deleted, so we were unable to observe any of these emails for the fiscal year ended May 31, 2025. Additionally, the University’s internal controls were not effective to ensure that student credit balances were identified and returned to students with 14 days as required. Effect or potential effect: Evidence of the performance of internal controls over the review of student credit balances did not exist. Additionally, due to ineffective controls, the refund of student credit balances were not made timely (within 14 days as required), which resulted in noncompliance. Questioned costs: $0 Context: We were unable to obtain the Argos email containing the report of students with credit balances for the 9 weeks selected. As a result, we could not observe that the University received these reports and performed the internal control of review and inspection of student credit balances to ensure that students received refunds as appropriate. The University indicated there was a storage issue with Outlook causing emails to be deleted, including those related to the credit balance control emails. We observed no such emails dated during the fiscal year ended May 31, 2025. Additionally, we observed noncompliance for 4 of 40 students, whereby 3 students did not receive refunds of credit balances within 14 days and 1 student did not receive a refund of the credit balance, since the University applied the credit to other charges; however, that was done after the 14 day requirement. 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: Not applicable. Recommendation: The University should ensure that internal controls over the identification and return of student credit balances are improved and effective and also maintain evidence of the performance of those internal controls. The University should ensure that student credits are identified and returned to students within 14 days, as required. Views of responsible officials: Management agrees with the finding and has developed a corrective action plan whereby the Office of Financial Assistance is now able to retain evidence of emails related to internal controls over award letters and direct loan notifications. Additionally, the Business Office is now running internal reports twice weekly to identify and process credit balances. The corrective action was implemented by May 23, 2025.