Finding Text
Federal Program: Student Financial Aid Cluster Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matters Federal Agency: Department of Education ALN Number: 84.063, 84.268, 84.033, 84.007 Criteria: Federal regulations require institutions to correctly calculate and disburse Pell Grant awards: Institutions must follow Title IV calculation and disbursement procedures. When an overpayment results from the institution’s failure to follow required procedures, the institution is liable, and must restore the overpaid amount to its Pell Grant Program account. Schools must package and disburse Title IV aid in compliance with the Federal Student Aid Handbook, including correcting over-awards and ensuring accurate Pell awards. Condition: During our audit of the College’s administration of Federal Pell Grants for the 2024–2025 award year, we noted an error in one of our sample selections that identified a system error in the financial aid system’s Pell calculation that resulted in incorrect disbursements for some students. Based on the College’s subsequent full-population analysis, eleven students received incorrect Pell Grant amounts. The College recalculated Pell Grant eligibility for affected students and prepared corrected award amounts. At the time of our testing, corrective actions had been initiated but were not yet complete. Cause: Due to a change in the way Pell awards are derived in conjunction with systems limitations, the College disbursed Pell amounts using an outdated calculation, wherein amounts disbursed did not agree to amounts awarded under the new calculation. This error was not detected through routine reconciliation or quality-control reviews. Context and Effect The error resulted in both overpayments and underpayments of Pell Grant funds. The College is at risk of: Being financially liable for Pell Grant overpayments attributable to institutional error, as defined by federal regulation. Students being temporarily underpaid, delaying access to entitled Title IV funds. Increased risk of noncompliance with Title IV requirements, which could affect program participation if uncorrected. Questioned costs: Overpayment of Pell awards totaling $1,718 and underpayment of Pell awards totaling $3,279. Recommendation: We recommend that the College: 1. Complete all necessary corrections by: o Returning overpaid Pell Grant amounts to the Pell Grant Program account for all cases where the College is liable. o Issuing additional disbursements to students who were underpaid, provided the award year remains open for processing. 2. Document all recalculations, including revised eligibility, corrected disbursement amounts, and evidence of system corrections. 3. Strengthen internal controls by implementing: o System validation checks on Pell calculation parameters, o Periodic reconciliation of disbursements to expected award schedules, and o A documented management review before each disbursement cycle. 4. Provide staff training on Pell Grant eligibility and disbursement requirements. Grantee Comment: Refer to Corrective Action Plan.