Finding Text
Finding 2024-011 - U.S. Department of Education (Title IV Student Financial Aid Programs - Failure to Obtain Required Verification Documentation Prior to Disbursing Title IV Aid (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.53(a)(3) and 34 CFR § 668.56, when a student is selected for verification, the institution must collect and review the required verification documentation before disbursing Title IV funds, unless the student qualifies for a permitted interim disbursement or other regulatory exception. Additionally, under 34 CFR § 668.16(f), the institution must develop and apply an adequate system to identify and resolve discrepancies in information that would affect a student’s Title IV eligibility. Condition – During testing of sixty (60) students, six (6) students were identified as having been selected for verification. Of the six (6) students subject to verification, one (1) student did not have the required verification documentation in the student file; however, Title IV funds were disbursed on the student’s behalf. As a result, the University disbursed Title IV funds without documentation demonstrating that the student’s eligibility had been verified in accordance with federal requirements. Subsequent to audit inquiry, the University provided verification documentation dated after the initial disbursement and after the exception was identified during audit procedures. Cause – The exception appears to have occurred due to breakdowns in the verification tracking process and insufficient review procedures to prevent packaging and disbursement prior to completing verification. Effect – As a result, the University awarded and disbursed Title IV funds to a student whose eligibility was not properly verified. This creates a risk of improper payment and may result in questioned costs for the Title IV funds disbursed to the student. Questioned Costs - $0 Perspective - Verification is a key Title IV eligibility control designed to ensure that federal aid is awarded based on accurate and supported student information. In this instance, one (1) out of six (6) students selected for verification (16.7%), or one (1) out of sixty (60) students tested overall (1.7%), did not have the required documentation on file prior to disbursement. Although the exception was limited to one student, the error indicates that controls over the University’s verification process did not operate effectively for all students selected for verification. While the University subsequently provided verification documentation, the documentation was obtained after disbursement and after audit procedures were performed, indicating that controls over the verification process did not operate effectively at the tie Title V funds were awarded. Repeat Finding - No Auditor’s Recommendation - The University should implement a verification checklist and tracking system, strengthen internal controls, and perform periodic file audits. Management’s Response – Management has implemented standardized checklists and workflows, added secondary review, provided additional training to staff, and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that required verification documentation was not consistently obtained and documented prior to the disbursement of Title IV federal student aid for students selected for verification.