Audit Finding Reference Number Questioned Cost 2024 - 002 - Return of Title IV Funds $54,799 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) 84.007 Federal Supplemental Educational Opportunity Grants (SEOG) 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 Section (N) (3) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. ABC is a college that is not required to take attendance. Thus, ABC must determine the student’s withdrawal date as either (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student’s control, the date the institution determines is related to that circumstances, (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Condition and Context During my audit, I noted the following: • Withdrawal Date Documentation - ABC did not provide documentation to support the students’ withdrawal date for three (3) of the five (5) students selected for the Return of Title IV Funds testing. As such, I was unable to ensure the Return of Title IV Funds calculation was prepared correctly as well as if the correct amount of funds were returned by ABC; • Missing Return of Title IV Funds Calculations - Three (3) students received Title IV aid and withdrew from ABC but did not have a Return of Title IV Funds calculation on file; • Incorrect Return of Title IV Funds Calculation - The “total days” per the Return of Title IV Funds calculation was incorrectly calculated for one (1) student out of one (1) tested for the Spring 2025 semester. ABC did not provide support for the student’s withdrawal date. As such, I could not determine what amount was required to be returned by ABC. The student received $6,919 comprised of $3,697 in PELL, $500 in SEOG, $990 in Unsubsidized loans and $1,732 in Subsidized loans. Since the withdrawal date is undetermined, the entire Title IV aid package may be required to be returned; and • Non-Passing Grades - ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students’ enrolled courses and received all non-passing grades for six (6) of the six (6) students selected for testing resulting in $47,880 to be returned by ABC. Cause ABC did not have adequate internal controls over the Return of Title IV Funds calculation process to ensure that withdrawal dates were properly documented, Return of Title IV Funds calculations were completed for all applicable students, and sufficient documentation was maintained to support the calculations. In addition, procedures were not in place to ensure that academic participation was adequately documented for students who received all non-passing grades and that the Return of Title IV Funds process was performed in accordance with federal requirements. Questioned Costs For purposes of this condition, I have questioned costs totaling $54,799 as follows: Program Amount Federal PELL Grant $ 25,884 Federal Supplemental Educational Opportunity Grant 3,500 Federal Direct Loan 25,415 Total $ 54,799 Effect As a result of the deficiencies noted, ABC was unable to demonstrate compliance with the Return of Title IV Funds calculation requirements. Without adequately documenting withdrawal dates and maintaining complete Return of Title IV Funds calculations, ABC cannot ensure that Title IV aid earned by withdrawing students is accurately calculated or that unearned Title IV funds are returned to the appropriate federal programs within the required timeframe. Consequently, the Department of Education may have overpaid Title IV assistance to students, resulting in questioned costs of $54,799 and increasing the risk of noncompliance with federal regulations. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2023-002. Recommendation I recommend that ABC strengthen its internal controls over the Return of Title IV Funds calculation process by: • Establishing procedures to ensure withdrawal dates are consistently identified and adequately documented in accordance with federal regulations; • Performing and retaining a Return of Title IV Funds calculation for every student who withdraws or otherwise requires an R2T4 determination; • Implementing procedures to document students' last dates of attendance or academically related activity for students receiving all non-passing grades; • Requiring supervisory review of Return of Title IV Funds calculations to verify the accuracy of the withdrawal date, total days in the payment period, and amounts earned and returned; and • Providing periodic training to financial aid and registrar personnel regarding the federal Return of Title IV Funds requirements. Management's Response The Institution concurs with this finding. Under new and experienced leadership, Arkansas Baptist College will implement processes to ensure accurate attendance and participation records. Arkansas Baptist College will calculate R2T4s accurately and will return the funds in a timely manner. Arkansas Baptist College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to R2T4 regulations.