FAC Explorer

Finding 386721 (2023-001)

Significant Deficiency
Requirement
E
Questioned Costs
$1
Year
2023
Accepted
2024-03-28
Audit: 299012
Organization: Maine Maritime Academy (ME)
Auditor: Baker Newman & Noyes LLC

AI Summary

  • Core Issue: Students were awarded loans incorrectly, with some receiving $1,000 less and one receiving $1,000 more than eligible.
  • Impacted Requirements: Loan awards did not comply with Department of Education criteria based on students' year in school and dependency status.
  • Recommended Follow-Up: Improve review processes for student data before loan approvals to prevent future discrepancies.

Finding Text

2023-001: Student Financial Assitance Cluster – Eligibility – Award Limits Federal Program: Student Financial Assistance Cluster; Federal Direct Student Loans Assistance Listing Number: 84.268 Federal Agency: U.S. Department of Education Pass-Through Entity: None Federal Awards Identification Number: P268K161537 Repeat Finding: This is not a repeat finding Criteria - In accordance with limits set by the Department of Education, students can receive Unsubsidized and Subsidized loans, with the loan amounts based on the student’s year in school and their status as an independent or a dependent. Condition and context – During our test work over Unsubsidized and Subsidized loans, we noted two students in our sample selected who were each awarded $1,000 less than they were eligible for based on their year in school. We noted one student who was awarded $1,000 more than they were eligible for based on their year in school. The sample selected was a statistically valid sample. Cause – Insufficient review of student data prior to loan approval. Effect or Potential Effect – The Academy did not award Unsubsidized and Subsidized loans in accordance with Department of Education criteria. Questioned Costs - $1,000. Questioned costs were determined based on the loan more than the allowable amount. Questioned costs related to assistance listing number 84.248. Recommendations – We recommend that management enhance control procedures to ensure that student data is sufficiently reviewed prior to loan disbursements being made. Management’s Views and Corrective Action Plan – Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the Summary Schedule of Prior Audit Findings.Criteria - In accordance with limits set by the Department of Education, students can receive Unsubsidized and Subsidized loans, with the loan amounts based on the student’s year in school and their status as an independent or a dependent. Condition and context – During our test work over Unsubsidized and Subsidized loans, we noted two students in our sample selected who were each awarded $1,000 less than they were eligible for based on their year in school. We noted one student who was awarded $1,000 more than they were eligible for based on their year in school. The sample selected was a statistically valid sample. Cause – Insufficient review of student data prior to loan approval. Effect or Potential Effect – The Academy did not award Unsubsidized and Subsidized loans in accordance with Department of Education criteria. Questioned Costs - $1,000. Questioned costs were determined based on the loan more than the allowable amount. Questioned costs related to assistance listing number 84.248. Recommendations – We recommend that management enhance control procedures to ensure that student data is sufficiently reviewed prior to loan disbursements being made. Management’s Views and Corrective Action Plan – Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the Summary Schedule of Prior Audit Findings.

Corrective Action Plan

Finding 2023-001: Student Financial Assistance Cluster – Eligibility – Award Limits Name of Contact Person: Alice Herrick, Director of Fiscal Operations; Ryan French, Director of Financial Aid Corrective Action Plan Introduction: This Corrective Action Plan addresses the significant deficiency identified in the audit regarding the review of student enrollment data prior to loan approval. The deficiency resulted in one noted student receiving a federal loan disbursement above their annual eligibility limit, and two students who each received a federal loan disbursement below their annual eligibility limit. We acknowledge the issue and have implemented immediate corrective measures to rectify the situation and prevent recurrence. Root Causes Analysis: The deficiency stemmed from two main factors: a. Limitations of PowerFAIDS: The software lacks automated quality control mechanisms to prevent overawarding or overdisbursement. Additionally, the software’s database design poses a challenge due to the “one-to-many” relationship of Periods of Enrollment (POE), making automated packaging algorithms which address this deficiency impossible. b. Staff Awareness: Financial aid staff were unaware of PowerFAIDS' limitations and lacked clear guidance on necessary quality control procedures. Immediate Corrective Actions Implemented: In response to the deficiency, the following actions have been taken: a. Manual Quality Control Procedure: A manual review process has been established prior to each semester's disbursement date. This process includes verifying student enrollment data and identifying discrepancies between self-reported class levels (PF: "F-YR-SCHOOL") and official class progression (PC: "academic_class_level", PF: "POE-YR-SCHL"). b. Repackaging and Communication: Students with verified discrepancies in class levels are repackaged accordingly and updated financial aid offer letters/emails are sent to notify students of changes and request their consideration. Confirmation of Effectiveness: A thorough review of the 2023-2024 academic year data confirms that no current students have been awarded or disbursed above their annual eligibility limit, validating the effectiveness of the implemented quality control procedure. Future Mitigation Strategies: To further mitigate the risk of noncompliance and reduce manual review time, the following strategies will be implemented: a. Dynamic Custom Field in PowerFAIDS: Proposing the creation of a dynamic custom field (e.g., “PC_ACL_Progression”) that updates student class levels via API integration with PowerCampus. b. Automated Packaging Rule: Developing an automated packaging rule within PowerFAIDS based on the dynamic custom field to identify Year In School (YIS) mismatches and trigger necessary repackaging. This rule will incorporate the YIS Mismatch quality control function and algorithm, reducing the time commitment necessary for manual review. Timeline for Implementation: While a current manual process is in place, the proposed future mitigation is forthcoming. a. Manual Quality Control Procedure: This procedure was put into effect by Financial Aid staff on November 16th, 2023, and was successfully implemented prior to Spring 2024 disbursement. All current disbursements of Federal TitleIV aid have been made in accordance with U.S. Department of Education criteria. b. Future Mitigation: The proposed dynamic custom field and automated packaging rule will be developed and implemented within the next academic year to streamline the quality control process and enhance compliance measures. Conclusion: Maine Maritime Academy is committed to ensuring compliance with U.S. Department of Education regulations and providing accurate and appropriate financial aid awards to students. The corrective actions outlined in this plan address the deficiencies identified in the Uniform Guidance audit and aim to prevent similar issues in the future. We appreciate the audit findings and remain dedicated to continuous improvement in our financial aid procedures. Name of Contact Person: Alice Herrick, Director of Fiscal Operations; Ryan French, Director of Financial Aid Corrective Action Plan: The Academy will review current procedures related to awarding Unsubsidized and Subsidized loans and implement additional review procedures to ensure awards to students are appropriately within limits set by the Department of Education. Planned Completion Date: June 2024

Categories

Questioned Costs Subrecipient Monitoring Eligibility Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 963163 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $6.26M
20.806 State Maritime Schools $2.85M
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.71M
84.063 Federal Pell Grant Program $1.09M
84.038 Federal Perkins Loan Program $688,509
84.007 Federal Supplemental Educational Opportunity Grants $103,201
84.033 Federal Work-Study Program $74,846
99.RD Uas Survey Methods Grant $22,514
47.RD Microbial Diversity Across Belfast Bay $6,891
47.RD Bio Surveillance of Alewives, Penobscot Bay $1,445