Finding Text
Finding 2023-008 – Student Financial Assistance Cluster – Fraudulent Enrollment
Repeat Finding: No
Federal Program Title – U.S. Department of Education
Student Financial Assistance Cluster
Federal Pell Grant Program: 84.063
Federal Work-Study Program: 84.033
Federal Supplemental Educational Opportunity Grants: 84.007
Federal Direct Student Loans: 84.268
Federal Award Year 2022-2023
Condition
City Colleges did not timely report information regarding potential fraudulent student enrollments to the Department of Education’s Office of Inspector General (OIG). City Colleges identified a total of 23 students where the Enrollment and Admissions Departments discovered submission of fraudulent documents to verify residency. City Colleges performed a thorough investigation of student enrollment and verified that no aid was disbursed for these identified fraudulent enrollments.
Criteria
In accordance with Chapter 3 “FSA Administrative and Related Requirements” of the Federal Student Aid Handbook, the Department of Education requires that “a school must refer any credible information indicating that an applicant for federal student aid may have engaged in fraud or other criminal misconduct in connection with his or her application.”
2 CFR Section 200.303 requires 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 in place to ensure all Department of Education requirements are followed.
Questioned Costs
There were no questioned costs with respect to this finding.
Cause
City Colleges experienced turnover in the Admissions Department and was training a new employee. The new employee did not have enough training or experience to identify fraudulent documents when the students enrolled with the college and registered for classes. City Colleges was not aware that this issue was required to be reported to the Department of Education.
Prevalence
Infrequent. 23 fraudulent applications were identified.
Effect
The inability to identify fraudulent documents could result in the incorrect distribution of student financial aid.
Recommendation
We recommend City Colleges increase training around reporting requirements to the U.S. Department of Education when fraudulent student enrollments occur.
Views of responsible officials
We agree with this finding. See corrective action plan.