Finding Text
Finding 2023-001
Federal Agency: United States Department of Education
Federal Program: Student Financial Aid Cluster
Assistance Listing Number: 84.268
Federal Award Years: 2023
Reference: 2023-001
Criteria
When Direct Loans or TEACH funds are being credited to a student’s account, the institution must notify
the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student’s right, or
parent’s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds
returned to the holder of that loan or the TEACH Grant payments returned to ED; and (3) the procedure
and time by which the student or parent must notify the institution that he or she wishes to cancel the loan,
TEACH Grant, or TEACH Grant disbursement (a minimum of 14 or 30 days depending on the confirmation
process).
Title 2 U.S. Code of Federal Regulations Part 200 (2CFR 200) Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards, section 303(a) states, the non-Federal entity must
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 statues, regulations,
and the terms and conditions of the Federal award. These internal controls should be in compliance with
guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General
of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Condition
During our testing of student loan notifications, KPMG identified one of forty students selected for testwork
that did not receive a notification for one loan disbursement during the year.
The item that was an exception described above did not result in changes to the amounts awarded or
disbursed to students by the College for the current fiscal year.
Cause
The condition identified was the result of a student that selected to opt-out of College email notifications,
which resulted in federal loan notifications to not be delivered. The College did not have adequate
processes in place to ensure appropriately notification in accordance with federal regulations when a
student selected to opt-out of receiving College communications.
Possible Asserted Effect
Failure to notify students of the timing of disbursements, their rights related to those disbursements, and
the procedures and timelines for cancellation could have resulted in students not being aware that a
disbursement was made or receiving loans that they did not intend to keep.
Questioned Costs
None.
Statistical Sampling
The sample was not intended to be, and was not, a statistically valid sample.
Identification of Whether the Audit Finding was a Repeat Finding
This is not a repeat finding.
Recommendation
We recommend the College review and enhance its process related to disbursement notifications to ensure
that they are complying with federal requirements.
Views of Responsible Officials
This finding was the result of students being allowed to opt out of all notifications from Endicott College,
which are initiated thru a notification system called EMMA. EMMA is the system of record used for notifying
students of loan disbursements and as a result of students being able to opt out of all EMMA notifications
this student was not notified of their loan disbursements.
As a result of this finding the college has disabled the ability for students to be able to opt out of all EMMA
notifications and thus being unable to opt out of student financial notifications such as loan disbursements.
This policy change was instituted in February 2024, when the college became aware of the issue.