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Audit Finding Reference Number 2024 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification ALN Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loans (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 III Part N – Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFR §668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student’s account, and those funds exceed the student’s allowable charges, an SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student’s account or the first day of classes of the payment period. Condition and Context I noted during my audit eighteen (18) out of ninety-eight (98) students had student financial aid credit balances, but ABC did not refund the credit balances to the students within the fourteen (14) day requirement. Cause ABC did not establish and implement adequate internal controls to ensure Student Financial Aid (SFA) credit balances were identified, monitored, and refunded to students within the timeframes required by federal regulations. Specifically, management did not have effective procedures in place to monitor outstanding credit balances and ensure timely processing of student refunds. Questioned Costs For purposes of this condition, I have no questioned costs. Effect As a result of these deficiencies, eighteen (18) students did not receive their Student Financial Aid credit balances within the timeframe prescribed by federal regulations. Failure to timely refund credit balances may adversely affect students' ability to meet educational expenses and exposes the institution to increased regulatory scrutiny and potential sanctions for noncompliance with Title IV requirements. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2023-004. Recommendation I recommend that ABC strengthen its internal controls over the Student Financial Aid credit balance process by implementing procedures within Jenzabar to identify and monitor students with Title IV credit balances. Management should utilize available system reports to regularly review outstanding credit balances, ensure refunds are processed within the fourteen (14) day requirement, maintain documentation supporting the date the credit balance occurred and the date the refund was issued, and require supervisory review to verify the completeness, accuracy, and timeliness of student refunds. Management’s Response The Institution concurs with this finding. Arkansas Baptist College will review and adhere to its practices, policies, and procedures along with federal regulations as it relates to resolving credit balances. Arkansas Baptist College will resolve credit balances in a timely manner within the 14-day period as defined in the Federal guidelines.