Finding Text
Federal Program Information: Federal Supplemental Educational Opportunity Grants (ALN: 84.007), Federal Pell Grant Program (ALN: 84.063), and Federal Direct Student Loans (ALN: 84.268) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): C. Cash Management - Institutions are permitted to draw down Title IV funds prior to disbursing funds to eligible students and parents. The institution’s request must not exceed the amount immediately needed to disburse funds to students or parents. A disbursement of funds occurs on the date an institution credits a student’s account or pays a student or parent directly with either student financial aid funds or institutional funds. The institution must make the disbursements as soon as administratively feasible, but no later than 3 business days following the receipt of funds. Any amounts not disbursed by the end of the third business day are considered to be excess cash and generally are required to be promptly returned to the U.S. Department of Education (the “ED”) (34 CFR section 668.166(a)(1)). Excess cash includes any funds received from the ED that are deposited or transferred to the institution’s Federal account as a result of an award adjustment, cancellation, or recovery. However, an excess cash balance tolerance is allowed if that balance: (1) is less than one percent of its prior-year drawdowns; and (2) is eliminated within the next 7 calendar days (34 CFR sections 668.166(a) and (b)). Condition: Multiple instances were identified during the fiscal year where funds drawn were held in excess of the allowable time frame and/or allowable thresholds. Cause: Insufficient internal controls and administrative oversight with respect to cash management compliance requirements. Effect or Potential Effect: The University is not properly following policies and procedures in place to ensure that compliance is maintained with cash management requirements. Questioned Costs: None. Context: All draws of federal funds were compared to cumulative disbursements to test for compliance with cash management requirements. Instances of cash held in excess of the allowable time frame and/or allowable thresholds were identified. Identification of Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2024-004 in the prior year schedule of findings and questioned costs. Recommendation¬¬: We recommend that the University enhance its internal controls, policies, and procedures to ensure that draw down requests do not exceed the amount immediately needed to disburse to students and that excess cash balances are eliminated timely. Views of Responsible Officials: The University concurs with the findings. Shaw University acknowledges that this finding is a repeat condition related to excess cash balances for Pell Grant, Direct Loan, and FSEOG funds not being eliminated within the required seven business days. Management has determined that prior corrective actions were not sufficiently formalized or consistently executed, particularly with respect to reconciliation and monitoring controls. Since that time, the University has strengthened its internal controls over Title IV cash management. A formal monthly reconciliation between G5 drawdowns and the general ledger has been implemented to ensure excess cash balances are identified and resolved timely. In addition, procedures have been revised to limit drawdowns to actual or immediate disbursement needs, and monitoring controls have been established to ensure compliance with the seven-business-day requirement. Management will continue to monitor these processes to ensure ongoing compliance with federal cash management regulations.