Finding Text
Finding No.: 2023-016 Federal Agency: U.S. Department of Education AL Program: 84.063 Federal Pell Grant Program Federal Award No.: P063P214572, P063P224572, P063P234572 Area: Special Tests and Provisions – Disbursements to or on Behalf of Students Questioned Costs: $145,861 Criteria: 34 CFR 668.165(a)(1) states that before an institution disburses title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each title IV, HEA program, and how and when those funds will be disbursed. 34 CFR 668.164(d)(1) states that an institution makes a direct payment: (i) To a student, for the amount of the title IV, HEA program funds that a student is eligible to receive by: (A) Initiating an EFT of that amount to the student’s financial account; (B) Issuing a check for that amount payable to, and requiring the endorsement of, the student; or (C) Dispensing cash for which the institution obtains a receipt signed by the student. 34 CFR 668.164(d)(2) states that an institution issues a check on the date that it: (i) Mails the check to the student or parent; or (ii) Notifies the student or parent that the check is available for immediate pick-up at a specified location at the institution. The institution may hold the check for no longer than 21 days after the date it notifies the student or parent. If the student or parent does not pick up the check, the institution must immediately mail the check to the student or parent, pay the student or parent directly by other means, or return the funds to the appropriate title IV, HEA program. 34 CFR 668.164(h) states that: (1) 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. (2) A title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but no later than: (i) Fourteen (14) days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (ii) Fourteen (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. 34 CFR 690.61(a)(1) states that an institution must disburse a Federal Pell Grant to an eligible student who is otherwise qualified to receive that disbursement and electronically transmit Federal Pell Grant disbursement data to the Secretary for that student if: (i) The student submits a valid SAR to the institution; or (ii) The institution obtains a valid ISIR for the student. 34 CFR 690.61(b) states that for a student to receive a Federal Pell Grant for an award year, the student must submit the relevant parts of the valid SAR to his or her institution or the institution must obtain a valid ISIR by the earlier of: (1) The last date that the student is still enrolled and eligible for payment at that institution; or (2) By the deadline date established by the Secretary through publication of a notice in the Federal Register. Conditions: 1. For sixty (or 100%) students tested, the College provided students with an award letter for the whole academic year which is based on full time enrollment. However, prior to disbursements, students were not notified of the final amount of funds that the student or his or her parent can expect to receive under title IV, and how and when those funds will be disbursed. 2. For thirty-eight (or 63%) of sixty students tested, the College did not pay the credit balance directly to the student or parent within the 14-day timeframe. 3. For five (or 8%) of sixty students tested, the College received a valid ISIR subsequent to the earlier of a) the student’s last date of enrollment; or b) the deadline date established by the Secretary through publication of a notice in the Federal Register. Cause: The College lacks adequate internal controls over compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Effect: The College is in noncompliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. The reportable questioned cost is $145,861 based on the items identified in Conditions above. Recommendation: College management should improve internal control policies and procedures requiring compliance with applicable special tests and provisions for disbursements to or on behalf of student requirements. Specifically, the College should implement a comprehensive communication strategy to ensure that all students receive clear and timely notifications regarding their Title IV funds. In addition, the College should establish a monitoring system to ensure that credit balances are disbursed within the 14-day timeframe to maintain compliance with federal regulations. Lastly, the College should strengthen internal control policies and procedures in obtaining students’ valid ISIR on a timely manner. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.