Finding 194809 (2022-003)

Material Weakness
Requirement
ABHI
Questioned Costs
$1
Year
2022
Accepted
2023-03-30
Audit: 178560
Organization: Southwestern Christian College (TX)

AI Summary

  • Core Issue: The College has material weaknesses in managing HEERF funding, leading to unallowable costs and missing documentation.
  • Impacted Requirements: Federal regulations for HEERF funding were not followed, resulting in questioned costs of $73,115.
  • Recommended Follow-Up: Review HEERF requirements, train staff on compliance, and implement procedures for proper documentation and expenditure classification.

Finding Text

Finding 2022-003 - U.S. Department of Education (USDE), Education Stabilization Fund (ESF) Higher Education Emergency Relief Fund (HEERF) (Material Weakness): Information on the federal program - HEERF Student Aid Portion, AL No. 84.425E, June 30, 2022; HEERF Institutional Portion, AL No. 84.425F, June 30, 2022; HEERF Historically Black Colleges and University's (HBCUs), AL No. 84.425J, June 30, 2022 Criteria - Federal regulations governing HEERF funding. Condition - We noted material weaknesses in the testing of expenditures under the HEERF funding received by the College. Questioned Costs - $73,115. Context- We observed the following during our testing of compliance with HEERF expenditures: Four (4) employees were paid bonuses totaling $21,000 which are unallowable costs under the HEERF program. Two (2) expenditures totaling $43,265 were missing the competitive bidding or explanation of selection for the contractor. One (1) disbursement package totaling $1,300 was not provided. The College erroneously recorded $7,550 in expenditures to HEERF that were for operations and another grant. College proposed an entry to reclass the expenditures; however, these amounts were included in the drawdown requests made during the year. Cause - It appears the above instance resulted in staff not properly following through with its procurement policies and following the guidelines of allowable activities and cost governing the Institutional and HBCU portions for the HEERF funding. Effect - Instances of noncompliance of the above regulations may result in sanctions being imposed or repayment for unallowable costs. Repeat Finding - No. Auditor's Recommendation - We recommend that the College review the HEERF funding requirements and ensure all staff members are familiar with the requirements to avoid incurring a liability to the U.S. Department of Education for non-compliance. Measures should be taken to specifically remedy the above findings. Views of Responsible Officials - Management will implement procedures to properly review HEERF expenditures and ensure proper compliance for exclusion on unallowable costs, presence of proper documentation of expenditures, including inclusion of com- petitive bids. Management will also implement procedures to ensure proper entry and review of the classification of grant expenditures.

Corrective Action Plan

Finding 2022-003 - U.S. Department of Education {USDE), Education Stabilization Fund (ESF) Higher Education Emergency Relief Fund (HEERF) (Material Weakness): We observed the following during our testing of compliance with HEERF expenditures: (a) Four (4) employees were paid bonuses totaling $21,000 which are unallowable costs under the HEERF program. (b) Two (2) expenditures totaling $43,265 were missing the competitive bidding or explanation of selection for the contractor. (c) One (1) disbursement package totaling $1,300 was not provided. (d) The College erroneously recorded $7,550 in expenditures to HEERF that were for operations and another grant. College proposed an entry to reclass the expenditures; however, these amounts were included in the drawdown requests made during the year. Recommendation - We recommend that the College review the HEERF funding requirements and ensure all staff members ore familiar with the requirements to avoid incurring a liability to the U.S. Department of Education for non-compliance. Measures should be taken to specifically remedy the above findings. Corrective Action - Management will implement procedures to properly review HEERF expenditure! and ensure proper compliance for exclusion on unallowable costs, presence of proper documen tation of expenditures, including inclusion of competitive bids. Management will also implemenl procedures to ensure proper entry and review of the classificationof grant expenditures.

Categories

Questioned Costs Procurement, Suspension & Debarment Allowable Costs / Cost Principles

Other Findings in this Audit

  • 194806 2022-002
    Material Weakness
  • 194807 2022-002
    Material Weakness
  • 194808 2022-002
    Material Weakness
  • 194810 2022-003
    Material Weakness
  • 194811 2022-003
    Material Weakness
  • 771248 2022-002
    Material Weakness
  • 771249 2022-002
    Material Weakness
  • 771250 2022-002
    Material Weakness
  • 771251 2022-003
    Material Weakness
  • 771252 2022-003
    Material Weakness
  • 771253 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $1.17M
84.063 Federal Pell Grant Program $464,465
84.047 Trio_upward Bound $170,347
16.710 Public Safety Partnership and Community Policing Grants $109,730
84.007 Federal Supplemental Educational Opportunity Grants $104,678
84.033 Federal Work-Study Program $76,981
84.031 Higher Education_institutional Aid $10,728