Finding Text
Finding number: 2023-007
Federal agency: U.S. Department of Education
Programs: Student Financial Assistance Cluster
Assistance listing #: 84.063 & 84.268
Award year: 2023
Compliance requirement: Special Tests
Criteria
According to 34 CFR 668.164(l):
(1) Notwithstanding any State law (such as a law that allows funds to escheat to the State), an institution must return to the Secretary any Title IV, Higher Education Act (“HEA”) program funds, except Federal Work Study (“FWS”) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the Federal portion of the payroll disbursement.
(2) If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued the check.
Condition
Federal regulations require an institution to return unclaimed Title IV funds issued by check or EFT within 240 days. During our testing, we noted 1 student, out of a sample of 2, that had unclaimed funds exceeding the federal day limit by 40 days. Our sample was not, and was not intended to be, statistically valid.
Cause
The College did not have appropriate internal controls in place to monitor the outstanding check aging to ensure that the 240-day timeframe was not exceeded.
Effect
The College did not return Title IV unclaimed funds to the Department of Education within the required 240-day time frame.
Questioned Costs
There was one outstanding check totaling $2,234, which pertained specifically to federal-sourced funds.
Identification as a Repeat Finding, if applicable
See finding 2022-006 included in the summary schedule of prior year findings.
Recommendation
The College should examine its policies and procedures and implement effective internal controls related to unclaimed funds including the process and time frame for identifying aged balances and the process for cancelling checks and returning funds to the Department of Education.
View of Responsible Officials
The College agrees with the finding.