Finding Text
Finding number: 2022-008
Federal agency: U.S. Department of Education
Programs: Student Financial Assistance Cluster
Assistance Listing #: 84.268
Award year: 2022
Compliance Requirement: Special Tests
Criteria
According to 34 CFR 685.300(b):
In the program participation agreement, the school must promise to comply with the Act and
applicable regulations and must agree to -
(5) On a monthly basis, reconcile institutional records with Direct Loan funds received from
the Secretary and Direct Loan disbursement records submitted to and accepted by the
Secretary;
An electronic announcement dated December 18, 2020, described the process by which the
Department of Education defines Direct Loan Reconciliation. Direct reconciliation is the process
by which Direct Loan funds received and disbursed as recorded on the Department of Education’s
systems are reviewed and compared with a school’s internal records and discrepancies are
identified and resolved.
Condition
Federal regulations require the College to reconcile their institutional records with their COD
disbursement records monthly. This reconciliation includes identifying discrepancies and
resolving them in a timely manner. For a sample of 3 months, during our testing, 2 months had
discrepancies that were not resolved in a timely manner. Our sample was not, and was not intended
to be, statistically valid. We noted that the College relied on the third-party servicer to perform
monthly reconciliation but did not review the reconciliation to resolve any discrepancies.
However, we noted that the College performed the year end reconciliation and noted no
discrepancies.
Cause
The College did not implement appropriate internal controls over monthly reconciliation
completed by the third-party servicer to ensure that differences found in reconciliations between
institutional records and COD's disbursement records were resolved in a timely basis.
Effect
Discrepancies are not identified and resolved in a timely manner.
Questioned Costs
Not applicable
Identification as a Repeat Finding, if applicable
See finding 2021-005 included in the summary schedule of prior year findings.
Recommendation
The College should implement internal controls to validate that reconciliations are performed
monthly between the College's institutional records and disbursement records submitted to the
COD and any discrepancies are identified and resolved in a timely manner.
View of Responsible Officials
The College agrees with the finding.