Finding Text
Criteria
As per the Code of Federal Regulations 34 CFR 668.166: Excess cash is any amount of FSA funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Department; or deposited or transferred to its depository account previously disbursed FSA funds received from the Department, such as those resulting from award adjustments, recoveries, or cancellations. Sometimes a school cannot disburse funds in the required three business days because of circumstances outside the school’s control.
If unusual circumstances exist, an institution may retain an excess cash tolerance for up to seven calendar days for an additional amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The school must immediately return to the Department any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the additional seven-day tolerance period.
Condition found
In three (3) of thirty-six (36) G-5 Direct Loan drawdowns from the San Juan Campus, refunds were not properly returned on G-5 during the required period of ten (10) days (3 business days plus an additional 7 calendar days).
Cause
The University’s cash management procedures allowed for some “lag time” regarding timeliness when returning funds. In addition, the procedures lacked specific information of the persons involved in the return of funds process and the reports that will be used. Finally, when funds needed to be returned, the University waited until the next drawdown of funds and netted the amount instead of immediately returning the funds.
Effect
Return of funds in G-5 took two (2) weeks longer than the seven-day tolerance period, resulting in excess cash.
Upon a finding that an institution maintained excess cash for any amount or time over that allowed in the tolerance provisions in paragraph (b) of section § 668.166, the actions the Secretary may take include, but are not limited to—
(1) Requiring the institution to reimburse the Secretary for the costs the Federal government incurred in providing that excess cash to the institution; and
(2) Providing funds to the institution under the reimbursement payment method or heightened cash monitoring payment method described in § 668.162(c) and (d), respectively.
Questioned cost
None. The funds were returned.
Context
Total amount of funds returned that were late was $213,905 out of a total of $587,434 for the campus of San Juan. The average of days passed between disbursement date and date of return of funds was 20 days.
Identification of a repeat finding
This is not a repeat finding.
Recommendation
We recommend that the University includes in its internal procedures and policies specific processes of returning of funds. These procedures need to include the time frame of returning of funds and the personnel responsible for it. This will assist the safeguard of timeliness and accuracy of the funds returned to the federal program.