Finding Text
Program Information: Federal Work-Study Program (ALN 84.033), Federal Pell Grant Program (ALN 84.063) and Federal Direct Student Loan Program (ALN 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): C. Cash Management - Institutions are permitted to draw down Title IV funds prior to disbursing funds to eligible students and parents. The institution’s request must not exceed the amount immediately needed to disburse funds to students or parents. A disbursement of funds occurs on the date an institution credits a student’s account or pays a student or parent directly with either student financial aid funds or institutional funds. The institution must make the disbursements as soon as administratively feasible, but no later than 3 business days following the receipt of funds. Any amounts not disbursed by the end of the third business day are considered to be excess cash and generally are required to be promptly returned to the U.S. Department of Education (the “ED”) (34 CFR section 668.166(a)(1)). Excess cash includes any funds received from the ED that are deposited or transferred to the institution’s Federal account as a result of an award adjustment, cancellation, or recovery. However, an excess cash balance tolerance is allowed if that balance: (1) is less than one percent of its prior-year drawdowns; and (2) is eliminated within the next 7 calendar days (34 CFR sections 668.166(a) and (b)).
Condition: Several instances during the year were identified in which Title IV funds, from each federal award, were drawn and held in excess of the allowable time frame and/or allowable thresholds.
Cause: Lack of internal controls and administrative oversight.
Effect or Potential Effect: Title IV funds were overdrawn or held in excess of the allowable time frame and/or allowable thresholds.
Questioned Costs: None.
Context: Several instances of funds drawn and held in excess of the allowable time frame and/or thresholds were identified throughout the University’s fiscal year.
Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2020-006 in the prior year schedule of findings and questioned costs.
Recommendation: We recommend that the University enhances its procedures and internal controls to ensure that federal funds are being drawn in accordance with federal regulations and facilitate an account review on the third business date after a federal draw to determine whether amounts were disbursed or require a return to the U.S. Department of Education.
Views of Responsible Officials and Planned Corrective Actions: Primarily the University implemented a robust ERP tool Ellucian Colleague that will assist in the administration and management of Title IV funds. This will include new workflows that have been added to the policies. Utilizing the workflows prescribed by Colleague the University will be able to work from reports to avoid these finding moving forward. In addition, the University contracted with Colleague for more formal training of all finance and financial aid employees. The FA Director and the Comptroller will work together weekly when disbursing funds. The Financial Aid Director will notify the Comptroller what amount is available to drawdown. Each area will complete their internal reconciliation. Effective June 2023 SAU is HCM2.