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.