Finding Text
2025-004 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: Reporting Questioned Costs: $0; Reporting only, no impact on award amount noted Repeat Finding: No Criteria: For Title IV programs reported through the Common Origination and Disbursement (COD) System, the U.S. Department of Education requires institutions to submit student disbursement records no later than 15 calendar days after making a disbursement or becoming aware of the need to adjust previously reported disbursement information. For the 2024-2025 award year, the Department provided a temporary flexibility under which institutions were not required to report disbursements made for the 2024-2025 award year until November 30, 2024, or 15 calendar days after the disbursement is made, whichever is later. For the Federal Pell Grant Program, Title 34 U.S. Code of Federal Regulations (CFR) Part 690.83 requires institutions to submit student Payment Data in accordance with prescribed procedures and to report changes by submitting updated Payment Data, and institutions must comply with procedures necessary to ensure reports are correct. For the Direct Loan Program, 34 CFR 685.309(a) requires participating schools to establish and maintain proper administrative and fiscal procedures and necessary records and to submit all reports required by the Direct Loan regulations and 34 CFR Part 668 to the Secretary. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including evaluating/monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing of COD System reporting for the Pell Grant and Direct Loan programs, the engagement team noted exceptions in both the accuracy and timeliness of information reported to COD: 1. Accuracy: One instance identified in which the Cost of Attendance (COA) amount reported to the COD System for a student was later determined incorrect. 2. Timeliness: Seven instances identified where disbursements were not reported to the COD System within required reporting timeframes, of which six relate to Pell Grant disbursements and one relates to Direct Loan disbursements. The College did not have a formal, documented process to validate key COD data elements prior to submission or to monitor and evidence timely reporting, including exception tracking and documented supervisory review. Cause: Management has not established formal, written procedures and related review or monitoring controls over COD reporting that address both (a) validation of key data elements prior to submission and (b) monitoring of required reporting timelines and timely correction of exceptions. As a result, COD reporting was susceptible to human error and delays without timely detection and correction. Effect: As a result of the lack of preventive and detective controls over COD reporting, inaccurate COA information was reported to COD for one student and disbursement reporting was not timely in seven instances subject to our compliance testing procedures. While the exceptions identified did not impact the students’ award amounts, they represent noncompliance with federal reporting requirements and increase the risk that COD submissions may be inaccurate, incomplete, or not timely corrected, which can impair effective reconciliation and program oversight. The College corrected the incorrect COA reported for the student identified. Recommendation: The College should strengthen controls over COD reporting by: 1. Implementing written COD reporting procedures that define required data validations (including key data elements such as COA), documentation standards, and responsibilities for preparation, review, and submission. 2. Establishing a secondary review and documented approval of COD submissions prior to transmission, including review of changes, corrections, and supporting documentation. 3. Implementing a recurring reporting cadence (e.g., weekly/bi-weekly) and an automated or standardized tracking log to monitor the 15-day disbursement reporting requirement and flag late items for timely follow-up. 4. Performing and retaining periodic reconciliations and exception monitoring between internal student records and COD-accepted records to validate accuracy and timeliness, including documentation of corrections and the basis for changes. View of Responsible Officials: See Auditee’s Corrective Action Plan.