Finding Text
2023-001: Gaps in General Controls for SFA/COD Process (Significant Deficiency)
Cluster: Student Financial Assistance
Sponsoring Agency: Department of Education
Award Names: Federal Pell Grant Program and Federal Direct Student Loans
Award Numbers: Not applicable
Assistance Listing Titles: Federal Pell Grant Program and Federal Direct Student Loans
Assistance Listing Numbers: 84.063 and 84.268
Award Year: 2022-2023
Pass-through entity: Not applicable
Criteria
As part of our audit, we are required to obtain an understanding of internal controls relevant to the audit,
which includes the end-to-end process around key financial reporting cycles and evidence the
implementation of relevant controls. 2 CFR 200.303, Internal Controls notes that non-federal entities 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 statutes, 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
On an annual basis, approximately 250 students at the St. Luke’s Hospital School of Nursing (the “School”) receive federal student financial assistance. The student financial aid program is administered by the Financial Aid Office, which consists of a Financial Aid Coordinator who reports to the Senior Associate Dean. The Financial Aid Coordinator is experienced in administering federal student aid; however, this individual is responsible for all aspects of financial aid administration and federal compliance. We obtained an understanding of the policies, procedures and controls in place at the School, however, through our testing of relevant controls, we noted there was a lack of documentation and evidence to support that the controls were operating effectively. More specifically, we were unable to evidence formal reviews and approvals when awarding or disbursing aid to students, Title IV refund calculations and various reconciliations to the COD.
Cause
The School has a small group of administrators with one individual having responsibility for the federal student financial aid process. As such, there are often segregation of duties issues encountered. While certain administrative personnel participate in some of the detailed federal student aid processes, one individual is ultimately responsible for these areas and does not consistently evidence reviews or is the doer such that there is no secondary review performed.
Effect
The lack of proper support for the key controls over eligibility, disbursements, return of Title IV funds and reporting to the COD results in risks related to the ongoing validity, completeness, and accuracy of the data.
Questioned Costs
None noted.
Recommendation
We recommend the School assess their current control environment structure and look for opportunities to utilize administrative staff to perform certain tasks, allowing the Financial Aid Coordinator to truly partake in a review role. Additionally, we recommend maintaining evidence of support for the controls being executed, including preparing a periodic checklist of tasks to be completed and who is responsible for the preparation and review and approval.
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 status of prior audit findings.