Finding Text
Audit Finding Reference Number 2024 - 003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification ALN Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2024 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or become aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Condition and Context I noted the following conditions during my testing of the COD system: • Accuracy of COD Reporting - The PELL amount was disbursed in the COD system did not agree to the students’ billing statements for seven (7) students out of eighty-two (82). The billing statements over reported $17564; • Accuracy of COD Reporting - The Direct loan amounts disbursed in the COD system did not agree to the students’ billing statements for six (6) students out of seventy-five (75) tested. The billing statements over reported $12,472; • Accuracy of COD Reporting - The enrollment date was incorrectly reported in COD for sixty-seven (67) students out of ninety-eight (98) tested; • Completeness of Documentation - The PELL Award Detail Information screen was not provided for four (4) of the eighty-two (82) tested to ensure the origination records were properly recorded; • Accuracy of COD Reporting - The cost of attendance budget as report in COD did not agree to the cost of attendance per the College’s records for two (2) of the eighty-two (82) students tested; • Completeness of Documentation - The COD PELL and Direct Loan disbursement records were not provided for fifteen (15) of the ninety-eight (98) students tested; • Timeliness of Reporting - The Direct Loan disbursements were made in COD before posting to the students’ account for eight (8) of the seventy-five (75) students tested; and • Timeliness of Reporting - The PELL and Direct Loan amounts were processed in COD more than fifteen (15) days after the amounts were posted to the students’ billing statement for thirty-three (33) of the eighty-two (82) students tested. Cause ABC did not establish and implement adequate internal controls over the preparation, review, reconciliation, and timely submission of origination and disbursement information reported to the Common Origination and Disbursement (COD) System. Specifically, management did not ensure that information reported to COD was reconciled to the institution's student financial aid and billing records, supporting documentation was maintained, and required reporting deadlines were consistently monitored and met. Questioned Costs For purposes of this condition, I have no questioned costs. Effect As a result of these deficiencies, ABC did not ensure that information reported to the Common Origination and Disbursement (COD) System was complete, accurate, and submitted within the required timeframes. Inaccurate or untimely reporting to the COD System increases the risk that the U.S. Department of Education relies on erroneous student financial aid information, which could result in incorrect Title IV program records, delays in identifying or correcting reporting errors, and noncompliance with federal reporting requirements. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2023-003. Recommendation I recommend that ABC strengthen its internal controls over the Common Origination and Disbursement (COD) reporting process by: • Implementing procedures to ensure all origination and disbursement records reported to COD are complete, accurate, and supported by the institution's financial aid and student account records. • Performing documented reconciliations between the COD System, the student information system, and student billing records on a regular basis. • Establishing procedures to ensure all required supporting documentation, including origination and disbursement records, is maintained and readily available for review. • Implementing monitoring procedures to ensure student disbursements and adjustments are reported to the COD System within the required federal timeframes. • Requiring supervisory review of COD reporting and reconciliations to identify and correct reporting discrepancies before submission. Management's Response The Institution concurs with this finding. Arkansas Baptist College will ensure the accuracy of the data that is input into the COD system, and Arkansas Baptist College will work to apply funds appropriately to students' accounts. Arkansas Baptist College will review, revise, and adhere to its practices, policies, and procedures along with federal guidelines as it relates to managing the COD system.