Finding Text
Finding 2025-011 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Obtain Required Verification Documentation Prior to Disbursing Title IV Aid (Significant Deficiency): 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 § 668.53(a)(3) and 34 CFR § 668.56, when a student is selected for verification, the institution must collect and review the required verification documentation before disbursing Title IV funds, unless the student qualifies for a permitted interim disbursement or other regulatory exception. Additionally, under 34 CFR § 668.16(f), the institution must develop and apply an adequate system to identify and resolve discrepancies in information that would affect a student’s Title IV eligibility. Condition – During testing of sixty (60) students, seven (7) students were identified as having been selected for verification. Of the seven (7) students subject to verification, two (2) students did not have the required verification documentation in the student file; however, Title IV funds were disbursed on the students’ behalf. As a result, the University disbursed Title IV funds without documentation demonstrating that the students’ eligibility had been verified in accordance with federal requirements. Cause – The exceptions appear to have occurred due to breakdowns in the verification tracking process and insufficient review procedures to prevent packaging and disbursement prior to completing verification. Effect – As a result, the University awarded and disbursed Title IV funds to students whose eligibility was not properly verified. This creates a risk of improper payment and may result in questioned costs for the Title IV funds disbursed to students. Questioned Costs – $5,546 Repeat Finding – Yes Auditor’s Perspective – Verification is a key Title IV eligibility control designed to ensure that federal aid is awarded based on accurate and supported student information. In this instance, two (2) out of seven (7) students selected for verification (28.57%), or two (2) out of sixty (60) students tested overall (3.33%), did not have the required documentation on file prior to disbursement. The absence of the required documentation prevents the University from demonstrating that verification was properly completed and that the students’ eligibility for Title IV funds was adequately supported prior to disbursement. The 28.57% exception rate among students subject to verification indicates a weakness in the University’s controls over the verification process and its maintenance of documentation necessary to substantiate compliance with Title IV requirements. Auditor’s Recommendation – The University should implement a verification checklist and tracking system, strengthen internal controls, and perform periodic file audits. 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.