Finding Text
Finding 2025-005: Missing Documentation of Required Title IV Disbursement Notifications – Significant Deficiency Federal Program: Federal Direct Student Loans [84.268] Criteria: The Federal Student Aid Handbook requires institutions to notify students of the amount and type of Title IV funds they are expected to receive, as well as how and when those funds will be disbursed. Under 34 CFR §668.165(a), institutions must provide this notification before disbursing Title IV funds and must maintain documentation supporting compliance with this requirement. Condition: During testing of Student Financial Assistance (SFA) disbursements, the Institution did not maintain documentation demonstrating that required Title IV disbursement notifications were provided to students. For the students selected for testing, the Institution could not provide evidence that students were notified of the amount and type of Title IV funds they were scheduled to receive, nor the timing and method of the disbursements, as required by federal regulations and the Federal Student Aid (FSA) Handbook. As a result, we were unable to verify that the required notifications were issued. Cause: The Institution’s internal controls over Title IV disbursement notifications were not operating effectively. The Institution did not retain evidence of notifications sent to students, and there is no formal process to ensure that required notifications are consistently documented and archived. Effect: Without documentation of required notifications, the Institution cannot demonstrate compliance with federal disbursement requirements. Students may not have been properly informed of their Title IV awards or disbursement schedules, increasing the risk of misunderstandings, disputes, or improper disbursements. The absence of documentation also limits the Institution’s ability to demonstrate compliance during audits or federal program reviews. Questioned Costs: None. This finding relates to documentation and compliance with notification requirements; no monetary impact was identified. Context: This is a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: The Institution should strengthen its internal controls over Title IV disbursement notifications by: Implementing a standardized process to generate and retain required notifications. Ensuring notifications include all required elements (amount, type, method, and timing of disbursements). Maintaining documentation in a centralized location accessible for audit and program review. Providing training to financial aid staff on federal notification requirements. Management Response: The Academy has reviewed its Title IV disbursement notification process and is implementing procedures to ensure that all required notifications are generated, issued to students prior to disbursement, and retained in accordance with federal regulations and institutional record retention requirements. The Academy will also establish a standardized process for documenting the date, method, and content of each notification. Additionally, financial aid staff will receive refresher training on Title IV disbursement notification requirements, and supervisory reviews will be incorporated into the disbursement process to verify that required notifications have been issued and properly documented before funds are disbursed. Management believes these enhanced controls will strengthen compliance with federal requirements and ensure adequate documentation is maintained for future audits