Finding 1191478 (2025-006)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2025
Accepted
2026-03-27
Audit: 395393
Organization: Montcalm Community College (MI)

AI Summary

  • Core Issue: The College drew down Federal Work Study funds not needed for immediate disbursement, leading to excess cash on hand.
  • Impacted Requirements: Noncompliance with Uniform Guidance §200.305(b) regarding timely disbursement and return of excess Title IV funds.
  • Recommended Follow-Up: Strengthen cash management controls to ensure drawdowns match immediate needs and excess cash is returned promptly.

Finding Text

Cash Management - Excess Cash on Hand Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Cash Management). Programs. Student Financial Assistance Cluster; U.S. Department of Education; Assistance Listing Numbers 84.033; Award Numbers P033A242049. Criteria. Under Uniform Guidance §200.305(b), payment methods must minimize the time elapsing between the transfer of Federal funds and the disbursement by the non‑Federal entity; advances must be limited to the minimum amounts needed and timed to actual, immediate cash requirements. For Title IV programs, excess cash is any amount of Title IV funds (other than Perkins) not disbursed by the end of the third business day after receipt or redeposit. An institution may hold a limited tolerance amount for up to seven days; any excess over the tolerance or held beyond seven days must be returned immediately. Title IV draws under the advance payment method may not exceed the amount needed immediately for disbursements the institution has made or will make to eligible students and must be disbursed within three business days of receipt. Condition. During our testing of cash management for campus-based aid, we noted one instance out of six drawdowns tested, that the College drew down Federal Work Study funds that were not needed for immediate disbursement, and was not returned timely. Cause. This delay resulted from management not having effective monitoring controls to (1) ensure Title IV draw requests were limited to immediate cash needs and (2) timely identify and return excess cash within the regulatory timeframes. Effect. As a result of this condition, the College was not in compliance with the Uniform Guidance cash management principles. Questioned Costs. No costs are required to be questioned as the amounts did not exceed the reporting threshold. Although excess cash was maintained, all funds were ultimately either disbursed to eligible students or returned; therefore, no unallowable charges were identified to student accounts. Recommendation. We recommend the College strengthen its cash management controls to ensure Title IV drawdowns are limited to immediate disbursement needs, reconciled promptly, and any excess cash is identified and returned within required regulatory timeframes. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.

Corrective Action Plan

Cash Management - Excess Cash on Hand Auditor Description of Condition and Effect. During our testing of cash management for campus-based aid, we noted one instance out of six drawdowns tested, that the College drew down Federal Work Study funds that were not needed for immediate disbursement, and was not returned timely. As a result of this condition, the College was not in compliance with the Uniform Guidance cash management principles. Auditor Recommendation. We recommend the College strengthen its cash‑management controls to ensure Title IV drawdowns are limited to immediate disbursement needs, reconciled promptly, and any excess cash is identified and returned within required regulatory timeframes. Corrective Action. The College is enhancing its federal cash management practices by limiting drawdowns for campus‑based programs, including Federal Work‑Study, to immediate disbursement needs. Drawdowns are now based on a documented three‑day cash needs forecast to ensure compliance with federal requirements. A standardized drawdown checklist requires staff to reconcile all G5 activity to the general ledger and subsidiary ledgers on the same day funds are drawn or disbursed. Any excess cash identified through this process is returned to the Department of Education via G5 within one business day. Monthly management reviews monitor drawdown timing, cash balances, and reconciliation trends to ensure continued compliance. Staff have been retrained on updated cash management procedures, and quarterly monitoring reports are produced and retained as evidence of ongoing compliance with federal cash management standards. Responsible Person. Jennifer Stimson, Director of Financial Aid with support from Scott Kemmer-Slater, Director of Accounting. Anticipated Completion Date. June 30, 2026

Categories

Cash Management Student Financial Aid

Other Findings in this Audit

  • 1191458 2025-002
    Material Weakness Repeat
  • 1191459 2025-002
    Material Weakness Repeat
  • 1191460 2025-002
    Material Weakness Repeat
  • 1191461 2025-002
    Material Weakness Repeat
  • 1191462 2025-002
    Material Weakness Repeat
  • 1191463 2025-003
    Material Weakness Repeat
  • 1191464 2025-003
    Material Weakness Repeat
  • 1191465 2025-003
    Material Weakness Repeat
  • 1191466 2025-003
    Material Weakness Repeat
  • 1191467 2025-003
    Material Weakness Repeat
  • 1191468 2025-004
    Material Weakness Repeat
  • 1191469 2025-004
    Material Weakness Repeat
  • 1191470 2025-004
    Material Weakness Repeat
  • 1191471 2025-004
    Material Weakness Repeat
  • 1191472 2025-004
    Material Weakness Repeat
  • 1191473 2025-005
    Material Weakness Repeat
  • 1191474 2025-005
    Material Weakness Repeat
  • 1191475 2025-005
    Material Weakness Repeat
  • 1191476 2025-005
    Material Weakness Repeat
  • 1191477 2025-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.268 FEDERAL DIRECT STUDENT LOANS $943,515
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $265,248
17.268 H-1B JOB TRAINING GRANTS $123,598
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES $114,209
84.007 FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS $61,793
84.033 FEDERAL WORK-STUDY PROGRAM $29,396
84.063 FEDERAL PELL GRANT PROGRAM $3,405