Finding Text
Finding 2025-006 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Reconcile Title IV Programs (Material Weakness): Information on the federal program – Federal Direct Student Loans, ALN 84.268, June 30, 2025; Federal Pell Grant Program, ALN 84.063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, ALN 84.007, June 30, 2025; Federal Work-Study Program, ALN 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.24 (a), institutions must maintain records necessary to demonstrate compliance with the requirements of Title IV of the Higher Education Act (HEA) programs, including records that support the accuracy of disbursements and fiscal transactions. Per the Federal Student Aid Handbook, Volume 4 – Processing Aid and Managing Funds, institutions are required to reconcile internal disbursement and expenditure records with the Business Office, general ledger, and the Department of Education’s systems (COD, G5, etc.) on a monthly basis for all Title IV programs. Additionally, for Federal Direct Loans specifically, per 34 CFR § 685.300(b)(5), institutions must reconcile the institution’s Federal Direct Loan records with the Department’s records at least monthly and resolve any discrepancies. Condition – The University did not perform required reconciliations between the Office of Financial Aid and the Business Office for the following Title IV programs during the audit period: • Federal Pell Grant Program • Federal Direct Student Loans • Federal Supplemental Educational Opportunity Grant (FSEOG) • Federal Work-Study (FWS) Program As a result, disbursement records maintained by the Office of Financial Aid did not reconcile to the general ledger or COD for any of the programs reviewed. No documentation of monthly or year-end reconciliations was provided for audit examination. Cause – The lack of reconciliation appears to have resulted from insufficient coordination and reconciliation timeliness between the Office of Financial Aid and the Business Office Effect – Failure to reconcile may impact the University’s administrative capability under 34 CFR § 668.16, exposing the University to regulatory review, questioned costs, and potential repayment liability. There is also an increased risk of overpayments or underpayments of federal aid and misstatements in the Schedule of Expenditures of Federal Awards (SEFA) and general ledger. Questioned Costs – $0 Repeat Finding – Yes Auditor’s Perspective – Reconciliation is a foundational internal control for Title IV program administration. The failure to reconcile across all four major programs indicates a systemic, not isolated, weakness in financial aid and accounting oversight. Auditor’s Recommendation – The University should implement monthly reconciliations, strengthen cross-department coordination, and perform year-end reconciliation prior to FISAP submission. Implementation of these measures will help ensure compliance with federal regulations, reduce financial reporting risk, and reinforce the University’s administrative capability. View of Responsible Officials – Management agrees with the finding. See the accompanying Corrective Action Plan for the University's planned corrective actions, responsible officials, and implementation dates.