Finding Text
2025-010 — Return of Title IV Funds (Special Test #5)– Material Weakness in Internal Control Over Compliance and Noncompliance (Repeat of Finding 2024-009) Federal program information: Funding agencies: U.S. Department of Education Titles: SFA Cluster ALN Number: 84.063 and 84.007 Award years: 2025 Criteria: Under 34 CFR 668.22, when a student who has received Title IV funds withdraws before completing a payment period or period of enrollment, the institution must determine the amount of Title IV funds that must be returned (“Return of Title IV Funds” or “R2T4”). Calculations must use accurate academic dates, correct student and institution portions, and returns must be made to the U.S. Department of Education (ED) within 45 days of the school’s determination that a student has withdrawn. The school must retain documentation supporting both the calculation and the timeliness of returns. Condition: The College failed to complete R2T4 calculations as required for recipients that ceased to be enrolled prior to the end of the period of enrollment. Additionally, the College was unable to provide documentation that returns were sent to the Department of ED; thus, REDW was unable to determine if returns completed as required within the 45-day required timeframe. Cause: These errors were caused by a lack of adequate controls and procedures for ensuring the completion and accuracy of R2T4 calculations, including proper identification of withdrawal dates, and timely return and documentation of Title IV funds. Additionally, there was insufficient staff training and oversight in the R2T4 process. Effect: Title IV funds were not calculated for all recipients who ceased to be enrolled as required and returns were not completed as required leading to noncompliance with grant requirements. Noncompliance exposes the College to audit findings, potential liabilities, and the risk of further federal sanctions as well as possible overpayment of fund recipients. Known Questioned Costs: $11,007. Likely Questioned Costs: $25,968. Total Questioned Costs: $36,975. Context: We selected a sample out of Pell recipients that withdrew during the audit period. We reviewed support and determined if the College accurately calculated the return of Title IV funds, allocated the returns as required, returned the funds timely and followed requirements for post-withdrawal disbursements. During our testing, we determined that the College did not calculate the return of funds as required for 5 out of 12 individuals. Additionally, the College was unable to provide documentation of returns sent to the Department of ED, thus, REDW was unable to determine if returns were completed. Recommendation: We recommend that the College implement enhanced controls for the Return of Title IV Funds process, including; proper identification of student withdrawals, verification of calculation accuracy, and procedures to ensure the return of funds within the required timeframe. The College should also retain detailed documentation of all returns and the corresponding dates. Staff should receive formal training on R2T4 requirements and managers should periodically review R2T4 calculations and records for ongoing compliance. Management’s Response: The College concurs with this finding. Management will implement adequate controls to ensure completion and accuracy of R2T4 calculations, including proper identification of withdrawal date, and timely return and documentation of Title IV funds. Management will provide training to relevant staff to ensure all processes including return of Title IV funds are accurate and timely.