Finding Text
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Assistance Listing Number: Student Financial Aid Cluster Award Period: September 1, 2024 to August 31, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 668.164(h) states a title IV, HEA credit balance occurs whenever the amount of title IV, HEA program funds credited to a student's ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. Title IV, HEA credit balances must be paid directly to the student or parent as soon as possible, but: (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition: During our testing of credit balances resulting from federal funds, we noted that although the refunds were ultimately paid, 3 out of 40 credit balances tested were not refunded within the required 14-day period. It was also noted that the credit balances selected for testing lacked sufficient documentation to demonstrate proper oversight. We were unable to identify formalized review/approval procedures to ensure that internal control activities are consistently executed and documented. Questioned Costs: None Context: Federal regulations require institutions to refund credit balances resulting from Title IV funds within 14 days of the balance being created. Timely refunds ensure compliance with U.S. Department of Education requirements and protect students from delays in receiving funds. Failure to meet this deadline can result in noncompliance and potential financial or administrative consequences. Cause: The District did not have proper procedures in place to ensure all credit balances are refunded within the 14-day period. Effect or Potential Effect of Finding: The District did not refund students within 14 days for credit balances that arose from federal funds as required by the regulations. Repeat Finding: No. Recommendation: We recommend the District review and strengthen its policies and procedures to ensure that all student credit balances resulting from federal funds are refunded within the required 14- day period. Views of Responsible Officials: There is no disagreement with the audit finding.