Finding 384322 (2023-003)

Finding 2023-003—Cash Management—Excess Cash Repeat Finding: No Federal Program Title—U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition During our cash management testing, we identified the following instances of excess cash: • The Institute had three instances of return of funds that resulted in excess cash for Federal Direct Student Loans ranging from $94 to $46,049 during the period of September 19, 2022 through November 29, 2022. In these situations, the excess cash amounts, being less than one percent of total prior year drawdowns, were not returned within a seven day tolerance period, as outlined below.   Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs There were no questioned costs related to testing of excess cash. Cause During this period of time, Erikson was without a Student Bursar due to a resignation in September 2022. The Student Bursar is responsible for requesting and monitoring the return of federal funds. With the staff transition there was a gap in monitoring cash management procedures. In December 2022 all excess cash was returned. A new Student Bursar was hired in November 2022 and onboarding included comprehensive federal funds cash management training with an outside consultant. Context Ranging from $94 - $46,049 during the period from Sept 19 – Nov 29. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding. Recommendation We recommend the Institute review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of Responsible Officials We agree with this finding. See corrective action plan.