Finding Text
FINDING 2022-002?Special Tests and Provisions?Borrower Data Transmission and Reconciliation: Material Weakness in Internal Control Over Compliance "SEE SCHEDULE OF FINDINGS AND QUESTION COSTS FOR CHART/TABLE" Criteria ? 34 CFR 685.300 Program participation agreement ? On a monthly basis, reconcile institutional records with Direct Loan funds received from the Secretary and Direct Loan disbursement records submitted to and accepted by the Secretary. Condition/context ? A sample of 4 direct loan reconciliations were selected from the population of all reconciliations performed by the University during the year ended June 30, 2022. We obtained the supporting schedules used to reconcile the disbursed direct loan funds to the federal government?s records. The University did not have effective internal control in place that would provide reasonable assurance that the University was in compliance with federal regulations and the University did not complete reconciliations for all of 2022 with the exception of March 2022. Cause ? Management did not have an established policy and procedure for borrower data transmission and reconciliation. Further, due to turnover in the position responsible for performing the monthly reconciliation, the process was not completed in the noted months. Effect ? Without established effective controls in place, the University could become out of compliance with federal rules and regulations. Repeat finding ? This is a repeat finding. See 2021-002. Recommendation ? We recommend the University establish an internal control such as supervisory review of the monthly direct loan reconciliation. The reviewer should obtain the supporting schedules used to reconcile University records to federal records and investigate any discrepancies or transactions that may indicate non-compliance. Further, the University should identify other individuals to perform the monthly reconciliation should there be illness or turnover. View of responsible officials ? Management acknowledges the deficiency. Due to significant turnover in the Financial Aid Office, management has outsourced its financial aid function to a third party. This partnership will ensure monthly loan reconciliations are performed on time and approved by the CFO.