Finding 2023-004– Cash Management – Excess Cash
Repeat Finding: No
Federal Program Title – U.S. Department of Education
Student Financial Assistance Cluster
Federal Direct Student Loans: 84.268
Federal Pell Grant Program: 84.063
Federal Award Year 2022-2023
Condition
During our cash management testing, we identified the following instances of excess cash:
• Kennedy King College had excess cash for the Pell Grant Program ranging from $34,408 to $175,609 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below.
• Kennedy King College had excess cash for the Direct Loan Program ranging from $1,349 to $4,318 during the period of November 29, 2022 through December 13, 2022, from $1,508 to $3,948 during the period of January 6, 2023 through January 16, 2023 and from $3,207 to $5,137 during the period of June 15, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below.
• Truman College had excess cash for the Pell Grant Program ranging from $164,625 to $262,034 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below.
• Truman College had excess cash for the Direct Loan Program ranging from $2,731 to $8,669 during the period of January 20, 2023 through February 16, 2023 and from $752 to $10,028 during the period of April 28, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below.
Criteria
Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period.
Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled.
Questioned Costs
Questioned costs would be those in excess of the one percent threshold. Questioned costs for the Kennedy King College Pell Grant Program excess cash ranged from $486 to $133,996. Questioned costs for Truman College Grant Program excess cash ranged from $108,399 to $205,809.
Cause
The College drew down funds available in the G5 system as opposed to drawing down expected student disbursement amounts.
Effect
Excess cash is noncompliance with Federal regulation and could result in the loss of future funding and the return of additional funds.
Recommendation
We recommend City Colleges review current processes for monitoring cash management and implement procedures that eliminate excess cash.
Views of responsible officials
We agree with this finding. See corrective action plan.