Finding Text
Federal Agency: U.S. Department of Education
Program: Student Financial Assistance Cluster – Federal Direct Loan Program: ALN 84.268
Criteria: An excess cash balance tolerance is allowed if that balance is less than 1% of the institution’s prior-year drawdowns and is eliminated within the next seven calendar days (34 CFR 668.166(a) and (b)). The institution must return immediately any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account within the seven-day tolerance period.
Condition: There was one drawdown from the G5 during the year for federal direct loans in which the College was in an excess cash position starting on June 29, 2022, through September 20, 2022 and controls in place did not identify the excess cash. The maximum daily excess cash balance during this time-period was $51,701.
Questioned Costs: None
Prevalence: Identified in 1 out of 15 disbursements tested during the June 30, 2022 audit. The sample was not intended to be, and was not, a statistically valid sample. Our testing during the June 30, 2023 audit did not identify any amount of excess cash remaining in the College’s account after September 20, 2022.
Effect: The DOE may require the institution to reimburse it for the costs the federal government incurred in providing that excess cash to the institution; and provide funds to the institution under the reimbursement payment method or heightened cash monitoring payment method (as described in CFR 668.162(c) and (d)).
Cause: This issue is the result of improper controls surrounding drawdowns to ensure that they are expended or returned to the DOE within the required timeframe.
Recommendation: We recommend management implement a control to regularly monitor disbursements and reconcile to drawdowns to ensure applicable requirements are met.
Reporting Views of Management and Corrective Actions: Management agrees with the finding and corrective actions were made.