Finding Text
Finding 2025-005 – Untimely Release of Title IV Credit Balances (Significant Deficiency): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that fourteen (14) out of sixty (60) sampled students had Title IV created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. All refunds were eventually released to the students. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs - $0 Repeat Finding – Yes Perspective – Title IV credit balances must be released to students or parents within 14 days of the date the credit balance is created, in accordance with federal cash management requirements. Timely disbursement is a critical control designed to ensure that students receive funds needed to cover educational expenses and to prevent institutions from improperly holding federal funds. During testing, fourteen (14) out of sixty (60) students (23.3%) were identified with untimely refund disbursements, indicating that controls over cash management and refund processing did not consistently operate effectively. Untimely disbursement may result in students not receiving funds when needed and places the College at risk of noncompliance with federal regulations and potential liabilities. Auditor’s Recommendation – The College should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. View of Responsible Officials – The College experienced significant staff turnover within the business office. In addition, the College is undergoing conversion to a new Enterprise Resource Planning (ERP) system which affected its ability to complete some functions in a timely manner. The College has engaged two accounting firms to assist with staff training and bring all functions current.