Finding Text
2025-003 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Eligibility Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title IV Student Financial Assistance regulations require institutions to determine and document key components used in establishing a student’s eligibility for Title IV aid. Cost of Attendance (COA) is a required component in determining a student’s eligibility and award amounts for Title IV aid. Title 34 Code of Federal Regulations (CFR) Part 668.2 defines COA and specifies allowable components that must be consistently applied in determining student eligibility and Title IV aid awards. In addition, Title IV regulations require institutions to evaluate and monitor a student’s Satisfactory Academic Progress (SAP) status at appropriate points to determine continued eligibility for Title IV aid. Further, 2 CFR 200.303 requires non-Federal entities to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that federal programs are administered in compliance with applicable statutes and regulations. These internal controls include documentation retention, segregation of duties, and monitoring and review of key determinations that directly affect eligibility and award calculations. Condition: The College calculated Cost of Attendance outside of its student information system using a manually maintained Excel spreadsheet that could be altered without restriction. The College did not retain finalized COA determinations in a reliable or non-modifiable format, and supporting information necessary to independently recalculate COA amounts was not consistently available. In addition, while the College maintains that it calculated the students’ Satisfactory Academic Progress (SAP) status at the time eligibility determinations were made, it did not retain documentation or reports evidencing that SAP status was reviewed and considered as part of the eligibility determination process. The Financial Aid Director solely prepared COA and SAP determinations, and there was no independent review or approval of these calculations, resulting in a lack of segregation of duties. As a result, during audit testing, the engagement team was unable to reliably recalculate Cost of Attendance for certain students and unable to verify that students’ SAP status was appropriately reviewed when determining Title IV eligibility. Cause: Management has not established formal, documented methodologies or controls over eligibility determinations, including Cost of Attendance calculations and review of Satisfactory Academic Progress. Controls requiring system-based calculations, retention of supporting documentation, and documented supervisory review and approval were not in place, and responsibilities for preparation, review, and approval of eligibility components were not clearly defined. Effect: Because the College did not maintain reliable documentation or effective controls over key eligibility determinations, including Cost of Attendance calculations and evidence of Satisfactory Academic Progress review, the engagement team was unable to conclude that student eligibility for Title IV aid was determined accurately and in accordance with federal requirements for all students tested. As a result, the College may have awarded Title IV funds to students based on inaccurate or unsupported eligibility determinations, resulting in unknown questioned costs and material noncompliance with Title IV program requirements. Recommendation: The College should strengthen controls over Cost of Attendance determinations by: 1. Establishing written policies and procedures governing Cost of Attendance and Satisfactory Academic Progress determinations in accordance with Title IV requirements. 2. Utilizing the student information system, or another controlled system, to calculate and retain COA determinations and SAP evaluations in a non-modifiable format. 3. Implementing segregation of duties, including documented independent review and approval of COA determinations and evidence of SAP status review by an individual not involved in the original calculations. 4. Retaining sufficient supporting documentation to allow for independent recalculation and verification of Cost of Attendance amounts and confirmation that SAP was reviewed at the time eligibility determinations were made. View of Responsible Officials: See Auditee’s Corrective Action Plan.