Finding Text
2025-006 Finding: Significant Deficiency in Internal Control Over 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: Special Tests and Provisions: Verification Questioned Costs: $0; Verification only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.51 through 668.61 require institutions participating in Title IV programs to comply with federal verification requirements, including verifying applicant information when selected, resolving discrepancies, and determining student eligibility prior to the disbursement of Title IV aid. An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61, including requirements for obtaining and reviewing acceptable documentation, completing verification, and maintaining records sufficient to demonstrate compliance with verification requirements. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable statutes and regulations, including appropriate documentation, supervisory review, and monitoring over verification activities. Condition: The College did not have a documented supervisory review process over verification procedures performed by financial aid processing staff. Verification activities were performed by individual processors; however, there was no documented evidence identifying who completed the verification, such as initials, signatures, system sign-offs, or other reviewer identifiers retained for audit purposes. While the Financial Aid Director indicated that random reviews of verification files occur periodically as part of staff training, these reviews were informal and not documented. As a result, the College could not demonstrate that verification procedures were consistently reviewed or approved to ensure accuracy and compliance. Cause: Management has not established formal, documented procedures requiring supervisory review, approval, and retention of evidence for verification activities. Responsibilities for documenting completion and review of verification were not clearly defined, and reliance was placed on informal monitoring practices that were not retained. Effect: Because the College did not retain evidence of who performed or reviewed verification procedures, the College could not demonstrate that verification requirements were consistently applied and appropriately reviewed for accuracy and completeness. This condition increases the risk that errors, omissions, or noncompliance in verification may not be detected or corrected on a timely basis due to insufficient internal controls and monitoring. Recommendation: The College should strengthen controls over verification by: 1. Establishing written verification procedures that define staff responsibilities, required documentation, and supervisory review expectations. 2. Requiring documented evidence of completion and review of verification activities (e.g., initials, electronic sign-off, or system workflow approvals) for each verification file. 3. Documenting supervisory or quality control reviews, including the scope and results of any spot reviews performed, and retaining this documentation for audit and monitoring purposes. View of Responsible Officials: See Auditee’s Corrective Action Plan