Finding 2025-01 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Reconcile Title IV Programs and Use of Unreconciled Data in FISAP Reporting (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.24 (a), institutions must maintain records necessary to demonstrate compliance with the requirements of Title IV of the Higher Education Act (HEA) programs, including records that support the accuracy of disbursements and fiscal transactions. Per the Federal Student Aid Handbook, Volume 4 – Processing Aid and Managing Funds, institutions are required to reconcile internal disbursement and expenditure records with the Business Office, general ledger, and the Department of Education’s systems (COD, G5, etc.) on a monthly basis for all Title IV programs. For Federal Direct Loans specifically, per 34 CFR § 685.300(b)(5), institutions must reconcile the institution’s Federal Direct Loan records with the Department’s records at least monthly and resolve any discrepancies. Additionally, per FISAP Instructions, institutions must ensure that all data reported on the Fiscal Operations Report and Application to Participate (FISAP) are accurate, supported, and reconciled to institutional records. Condition – It was noted that the College did not perform the required reconciliations between: a. The Student Financial Aid (SFA) Office records, b. The Business Office/General Ledger (SEFA), and c. The Common Origination and Disbursement (COD) System. In addition, unreconciled figures from the institution’s internal records were used in preparing and submitting the Fiscal Operations Report and Application to Participate (FISAP) submitted to the U.S. Department of Education for the most recent award year. As a result, the institution could not demonstrate that Title IV activity reported to ED was accurate or fully supported at the time of testing. Subsequent to the identification of this exception, management provided additional documentation intended to support reconciliation activities; however, the documentation did not demonstrate that reconciliations were performed timely or as part of established internal control procedures during the period under audit. Cause – The lack of reconciliation appears to have resulted from insufficient coordination and reconciliation timeliness between the Office of Financial Aid and the Business Office. Effect – Failure to reconcile may impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory review, questioned costs, and potential repayment liability. There is also an increased risk of overpayments or underpayments of federal aid and misstatements in the Schedule of Expenditures of Federal Awards (SEFA) and general ledger. Questioned Costs - $0 Perspective – Reconciliation is a foundational internal control for Title IV program administration. The failure to reconcile across all four major programs indicates a systemic, not isolated, weakness in financial aid and accounting oversight. In this instance, the College did not perform the required reconciliations and subsequently relied on unreconciled internal records to prepare and submit the Fiscal Operations Report and Application to Participate (FISAP) to the U.S. Department of Education. As a result, the College could not demonstrate that Title IV activity reported to ED was accurate, complete, or supported. Repeat Finding – Yes Auditor’s Recommendation – The College should implement monthly reconciliations, strengthen crossdepartment coordination, perform year end reconciliation prior to FISAP submission. Implementation of these measures will help ensure compliance with federal regulations, reduce financial reporting risk, and reinforce the College’s administrative capability. Management Response – Beginning with future monthly Title IV reconciliations, the Institution will complete all required reconciliations no later than five (5) days after the COD reconciliation reports are made available. The Financial Aid Office will provide the reports to the Business Office for reconciliation. Following reconciliation by the Business Office, the reports will be returned to the Financial Aid Office when resolution of discrepancies is required. Once discrepancies are resolved, the Financial Aid Office will submit the updated reports back to the Business Office, and the resolution will be documented. If no resolution is required, the reports will be retained for the applicable month. All monthly reconciliations will be maintained and made available for review during the year-end audit by the Business Office. Responsible Officials - The Financial Aid Office under the direction of the Vice President of Student Affairs plans to have the finding resolved by its next fiscal year end audit (between July – October 2026). The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding.