Finding Text
2025-007 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: Special Tests and Provisions: Disbursements to or on Behalf of Students Questioned Costs: $0; Notification requirement only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 668.165(a)(1) requires that, before an institution disburses Title IV funds for any award year, the institution must notify the student of the amount of funds the student (or parent) can expect to receive under each Title IV program and how and when those funds will be disbursed. 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 monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing related to disbursements to or on behalf of students, the engagement team identified seven Pell Grant students for whom the required notification of Title IV funds and disbursement timing was not provided prior to the Pell disbursement. In each instance, the student was notified of the award after the disbursement had already been made. The College did not have a formal, documented process to ensure required notifications were issued before disbursement, or to evidence supervisory review and exception monitoring over the timing of notifications. Cause: Management has not established written procedures and related review or monitoring controls over the timing of Title IV disbursement notifications, including defined responsibility, documentation standards, and supervisory review to ensure notices are issued before disbursement. As a result, required notifications were not consistently provided timely. Effect: As a result of the lack of preventive and detective controls over disbursement notification requirements, the College did not timely notify students prior to disbursing Pell Grant funds in seven instances subject to our compliance testing procedures. While no impact on the students’ award amounts was noted, the exceptions represent noncompliance with federal notification requirements and increase the risk that students may not receive required information about their Title IV funding and disbursement timing prior to funds being disbursed. Recommendation: The College should strengthen controls over Title IV disbursement notifications by: 1. Implementing written procedures requiring the Title IV notification to be issued prior to any Title IV disbursement for the award year, including required content, timing, and documentation requirements. 2. Implementing documented supervisory review of notifications and exception follow-up to ensure notices are timely and recurring issues are promptly corrected. View of Responsible Officials: See Auditee’s Corrective Action Plan.