Finding Text
FINDING 2025-002 – Cash Management: Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance (See table in "Schedule of Findings and Questioned Costs". Criteria –34 CFR 668.166 (a), Excess Cash: a) General. The Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution— 1. Received those funds from the Secretary; or 2. Deposited or transferred to its depository account previously disbursed title IV, HEA program funds, such as those resulting from award adjustments, recoveries, or cancellations. The Department of Education allows an institution to retain, for up to seven days, excess cash that does not exceed one percent of the total amount of funds drawn by the institution in the prior award year. The institution must return to the Department of education any excess cash over the tolerable amount (one percent) and any amount remaining after the tolerance period (seven days). Questioned costs would be those in excess of the one percent threshold. Condition/Context – The University made 48 draws for various student financial assistance cluster programs. We selected a sample of 7 and believe this to be a representative sample; however, it was not a statistical sample. Effect – We noted one instance in which the University made an advance drawdown of $10,662,472 that was not disbursed to students until 18 days after receiving the cash drawdown. This drawdown exceeded 1% of total drawdowns from funding in the prior fiscal year and was retained for more than the tolerance period described in the criteria above. We noted the University calculated interest on the days outstanding and applied the interest to the program. Cause – The excess drawdown occurred due to a conservative approach taken by the University to ensure sufficient funds were available to cover anticipated February 2025 disbursements, which resulted in an advance drawdown being requested in January 2025 prior to the related disbursements. Questioned Costs – Advance drawdowns totaling $9,872,238 exceeded one percent of prior-year drawdowns that were held beyond the seven day tolerance period before disbursement to students. Repeat Finding – Not a repeat finding. Recommendation – We recommend that the University’s management continue to adhere to its established internal control procedures requiring that any excess advance drawdowns be processed within three business days. Views of Responsible Officials and Planned Corrective Actions – Management agrees with the finding. See the corrective action plan for further detail.