Finding Text
Finding 2025-002: AL #84.063 Federal Pell Grant Program; AL #84.268 Federal Direct Student Loans Criteria: Auditors performing single audits in accordance with Subpart F of the Uniform Guidance must report known or likely fraud affecting a Federal award as an audit finding (2 C.F.R. §200.516). The disbursement of federal student financial aid funds should be made only to eligible students enrolled in eligible programs (34 CFR 668.32). Condition: During the Spring 2025 term, a third-party servicer notified the College that two students had requested that refunds be deposited into the same bank account. The students were contacted, and both responded in a timely manner to confirm their bank account information. However, upon further review by the College, it was noted that both students were enrolled in online learning programs and, although they had logged on and submitted coursework, the College found that the students' names matched those of individuals incarcerated out of state. Based on this information, the College requested the students submit Identity and Statement of Education Purpose forms to confirm the students' identities. When the students failed to provide the form, the Title IV aid and loans were prevented from being disbursed to the students. The College, of its own volition, then further extended its internal review and identified five additional students with similar circumstances in the Fall 2024 and Spring 2025 terms. As a result of the College's internal review, it was determined that these students were also ineligible for student financial aid. Cause: The College was the victim of fraud perpetrated by a third party. Effect: The College disbursed aid to five individuals enrolled in online learning programs who were not eligible for aid. Upon identification, the College reversed the aid on the students' accounts, returned aid totaling $13,200 for Fall 2024 and $16,936 for Spring 2025 to the federal government, and contacted the DOE's Office of Inspector General. Questioned Costs: $30,136 Auditors’ Recommendation: The College should continue to follow the enhanced procedures implemented by management after identification of the fraud. Views of Responsible Officials: The College has taken all appropriate action and this matter is reported pursuant to Uniform Guidance requiring auditors to report all known or likely fraud affecting a Federal award.