Finding 36063 (2022-001)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2022
Accepted
2023-04-09
Audit: 34010
Organization: Hawaii Pacific University (HI)
Auditor: Kmh LLP

AI Summary

  • Core Issue: Insufficient documentation for payroll and non-payroll expenditures related to the HEERF Program led to an inability to verify compliance with federal requirements.
  • Impacted Requirements: 2 CFR 200.303(a) mandates effective internal controls to ensure proper management of federal awards, which were not adequately established or followed.
  • Recommended Follow-Up: For future programs, develop and maintain documented policies and procedures, ensuring independent reviews of expenditures to strengthen internal controls and compliance.

Finding Text

Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the HEERF Program, for non-student related payroll and non-payroll expenditures, management did not provide sufficient support for justification for the allocation of these costs to the program. Consequently, we were unable to audit the allowability of these costs. Additionally, for expenditures related to financial aid grants to students, there was no independent review to ensure allowability of costs prior to disbursement. Context: For the non-student payroll-related expenditures, management indicated that department heads and the University?s Office of Sponsored Projects (OSP) held discussions to determine estimates of the time each departments? employees spent on allowable COVID-related activities; however, the discussion related to the rationale, basis and final allocations were not consistently documented. We selected a non-statistical sample of 20 payroll items representing $90,009 of which 17 items representing $75,564 had no documentation of the justification supporting the allocation. Total payroll expenditures for the program were $3,890,213. For non-student non-payroll expenditures, management did not consistently document the justification supporting the allocation of costs to the program. We selected a non-statistical sample of 15 items representing $659,611 of which 5 items representing $76,035 did not have documentation of the justification supporting the allocation. Total non-student non-payroll expenditures for the program were $2,899,106. For the financial aid grants to students, we noted that one person prepares the listing for disbursement with no independent review. Total financial aid grants to students was $4,301,887. Cause: Management indicated that due to the urgency in ensuring funds were distributed as quickly as possible, documented policies and procedures to administer the program were not developed and therefore not all supporting justifications were documented. For financial aid grants to students, management did not design a control to allow to provide for an independent review of allowability prior to disbursement. Effect: Expenditures for non-student related payroll, non-payroll items and financial aid grants to students could be disbursed for unallowable costs. Questioned Costs: None Identification of a repeat finding: This is a repeat finding of 2021-002. Recommendations: The HEERF Program has ended for the University. We recommend that should similar programs become available in the future, that management develop documented policies and procedures to administer the program and that management maintain documentation to evidence the internal controls. Views of responsible officials: The HPU Financial Aid Office works hard to follow all federal regulations and guidance mandated for the Title IV Federal Student Aid programs. In regards to the distribution of the Federal HEERF fund to HPU students, the HPU Financial Aid Director relied on reports from the SIS (Banner system), Institutional Research, and Accounts Receivable to determine students eligible for HEERF funds. The HPU Financial Aid Office and Office of Sponsored Projects worked hard, and diligently, to award funds to students and expend Institution portion based on the regulations that were provided at the time and not violating the intent of the program, as evidenced by there not being any non-compliance over allowability of costs charged to Federal HEERF fund. For future awards, the Principal Investigator with the assistance of the Office of Sponsored Projects will review diligently the expenditure to be sure the expenditures are within the allowability and terms and conditions of the federal awards. Both offices will work collaboratively so that the internal controls over allowability are strengthened and that the documentation will be strongly implemented and retained. For future programs, the HPU Financial Aid will work to strategically plan, organize, and disburse funds to students and expend Institution funds within the requirements mandated by the United States Department of Education, including strengthening our internal controls over compliance, and increasing the documentation and maintenance of documentation over our existing internal controls for compliance.

Corrective Action Plan

Views of Responsible Officials and Planned Corrective Action The HPU Financial Aid Office works hard to follow all federal regulations and guidance mandated for the Title IV Federal Student Aid programs. In regards to the distribution of the Federal HEERF fund to HPU students, the HPU Financial Aid Director relied on reports from the SIS (Banner system), Institutional Research, and Accounts Receivable to determine students eligible for HEERF funds. The HPU Financial Aid Office and Office of Sponsored Projects worked hard, and diligently, to award funds to students and expend Institution portion based on the regulations that were provided at the time and not violating the intent of the program, as evidenced by there not being any non-compliance over allowability of costs charged to Federal HEERF fund. For future awards, the Principal Investigator with the assistance of the Office of Sponsored Projects will review diligently the expenditure to be sure the expenditures are within the allowability and terms and conditions of the federal awards. Both offices will work collaboratively so that the internal controls over allowability are strengthened and that the documentation will be strongly implemented and retained. For future programs, the HPU Financial Aid will work to strategically plan, organize, and disburse funds to students and expend Institution funds within the requirements mandated by the United States Department of Education, including strengthening our internal controls over compliance, and increasing the documentation and maintenance of documentation over our existing internal controls for compliance. Person Responsible: Manager, for Office of Sponsored Projects & Assistant VP for Office of Sponsored Projects, Director of Financial Aid Targeted Correction Date: June 30, 2023.

Categories

Allowable Costs / Cost Principles Student Financial Aid

Other Findings in this Audit

  • 35917 2022-004
    Material Weakness
  • 35918 2022-005
    Significant Deficiency
  • 36041 2022-006
    Significant Deficiency
  • 36042 2022-004
    Material Weakness
  • 36043 2022-005
    Significant Deficiency
  • 36044 2022-006
    Significant Deficiency
  • 36045 2022-004
    Material Weakness
  • 36046 2022-005
    Significant Deficiency
  • 36047 2022-006
    Significant Deficiency
  • 36048 2022-004
    Material Weakness
  • 36049 2022-005
    Significant Deficiency
  • 36050 2022-006
    Significant Deficiency
  • 36051 2022-004
    Material Weakness
  • 36052 2022-005
    Significant Deficiency
  • 36053 2022-006
    Significant Deficiency
  • 36054 2022-004
    Material Weakness
  • 36055 2022-005
    Significant Deficiency
  • 36056 2022-006
    Significant Deficiency
  • 36057 2022-004
    Material Weakness
  • 36058 2022-005
    Significant Deficiency
  • 36059 2022-006
    Significant Deficiency
  • 36060 2022-004
    Material Weakness
  • 36061 2022-005
    Significant Deficiency
  • 36062 2022-006
    Significant Deficiency
  • 36064 2022-002
    Material Weakness Repeat
  • 36065 2022-001
    Material Weakness Repeat
  • 36066 2022-002
    Material Weakness Repeat
  • 36067 2022-001
    Material Weakness Repeat
  • 36068 2022-002
    Material Weakness Repeat
  • 37100 2022-003
    Material Weakness
  • 37101 2022-001
    Material Weakness Repeat
  • 37102 2022-002
    Material Weakness Repeat
  • 37103 2022-003
    Material Weakness
  • 37104 2022-004
    Material Weakness
  • 37105 2022-005
    Significant Deficiency
  • 37106 2022-006
    Significant Deficiency
  • 37107 2022-004
    Material Weakness
  • 37108 2022-005
    Significant Deficiency
  • 37109 2022-006
    Significant Deficiency
  • 37110 2022-004
    Material Weakness
  • 37111 2022-005
    Significant Deficiency
  • 37112 2022-006
    Significant Deficiency
  • 37113 2022-004
    Material Weakness
  • 37114 2022-005
    Significant Deficiency
  • 37115 2022-006
    Significant Deficiency
  • 612359 2022-004
    Material Weakness
  • 612360 2022-005
    Significant Deficiency
  • 612483 2022-006
    Significant Deficiency
  • 612484 2022-004
    Material Weakness
  • 612485 2022-005
    Significant Deficiency
  • 612486 2022-006
    Significant Deficiency
  • 612487 2022-004
    Material Weakness
  • 612488 2022-005
    Significant Deficiency
  • 612489 2022-006
    Significant Deficiency
  • 612490 2022-004
    Material Weakness
  • 612491 2022-005
    Significant Deficiency
  • 612492 2022-006
    Significant Deficiency
  • 612493 2022-004
    Material Weakness
  • 612494 2022-005
    Significant Deficiency
  • 612495 2022-006
    Significant Deficiency
  • 612496 2022-004
    Material Weakness
  • 612497 2022-005
    Significant Deficiency
  • 612498 2022-006
    Significant Deficiency
  • 612499 2022-004
    Material Weakness
  • 612500 2022-005
    Significant Deficiency
  • 612501 2022-006
    Significant Deficiency
  • 612502 2022-004
    Material Weakness
  • 612503 2022-005
    Significant Deficiency
  • 612504 2022-006
    Significant Deficiency
  • 612505 2022-001
    Material Weakness Repeat
  • 612506 2022-002
    Material Weakness Repeat
  • 612507 2022-001
    Material Weakness Repeat
  • 612508 2022-002
    Material Weakness Repeat
  • 612509 2022-001
    Material Weakness Repeat
  • 612510 2022-002
    Material Weakness Repeat
  • 613542 2022-003
    Material Weakness
  • 613543 2022-001
    Material Weakness Repeat
  • 613544 2022-002
    Material Weakness Repeat
  • 613545 2022-003
    Material Weakness
  • 613546 2022-004
    Material Weakness
  • 613547 2022-005
    Significant Deficiency
  • 613548 2022-006
    Significant Deficiency
  • 613549 2022-004
    Material Weakness
  • 613550 2022-005
    Significant Deficiency
  • 613551 2022-006
    Significant Deficiency
  • 613552 2022-004
    Material Weakness
  • 613553 2022-005
    Significant Deficiency
  • 613554 2022-006
    Significant Deficiency
  • 613555 2022-004
    Material Weakness
  • 613556 2022-005
    Significant Deficiency
  • 613557 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $17.38M
84.063 Federal Pell Grant Program $3.72M
84.425 Education Stabilization Fund $2.95M
84.038 Federal Perkins Loan (fpl) $790,904
93.859 Biomedical Research and Research Training $522,046
93.364 Nursing Student Loans $462,887
47.050 Geosciences $389,012
11.609 Measurement and Engineering Research and Standards $310,535
84.033 Federal Work-Study Program $294,625
93.310 Trans-Nih Research Support $291,327
84.031 Higher Education_institutional Aid $259,702
93.279 Drug Abuse and Addiction Research Programs $232,064
84.007 Federal Supplemental Educational Opportunity Grants $213,118
10.200 Grants for Agricultural Research, Special Research Grants $185,251
47.070 Computer and Information Science and Engineering $106,212
93.932 Native Hawaiian Health Care Systems $60,000
11.427 Fisheries Development and Utilization Research and Development Grants and Cooperative Agreements Program $50,236
10.855 Distance Learning and Telemedicine Loans and Grants $34,049
45.308 Native American/native Hawaiian Museum Services Program $28,628
15.608 Fish and Wildlife Management Assistance $17,654
47.076 Education and Human Resources $16,638
93.397 Cancer Centers Support Grants $9,267
11.452 Unallied Industry Projects $8,616
11.454 Unallied Management Projects $8,503
66.817 State and Tribal Response Program Grants $5,875
84.379 Teacher Education Assistance for College and Higher Education Grants (teach Grants) $0
93.264 Nurse Faculty Loan Program (nflp) $0