Finding 519609 (2024-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-01-17
Audit: 338706
Organization: Cleary University (MI)
Auditor: Capincrouse LLP

AI Summary

  • Core Issue: The University failed to return unearned Title IV funds accurately and on time when students withdrew, leading to significant compliance issues.
  • Impacted Requirements: Noncompliance with 34 CFR 668.22 and 34 CFR 690.63, resulting in questioned costs of $8,683.
  • Recommended Follow-Up: Assign a knowledgeable financial aid staff member to regularly review R2T4 processes and ensure Pell recalculations are completed before R2T4 calculations.

Finding Text

Incorrect and Untimely Return of Title IV Funds Calculation (R2T4) Material Weakness DEPARTMENT OF EDUCATION ALN #: 84.063, 84.268, and 84.007 Federal Award Identification #: 2023-2024 Award Year Condition: When students withdrew either officially or unofficially, the University did not always return unearned Title IV aid accurately or timely. Criteria: 34 CFR 668.22 and 34 CFR 690.63 Questioned Costs: $8,683 Context: Out of 23 students tested, 4 students had returns totaling $7,626 ranging from 18 to 123 days late. 1 student had $1,429 of federal direct loans returned but then incorrectly disbursed back to the student. These funds were returned back to the Department of Education in September 2024, 247 days late. 1 student had an R2T4 calculated but the unearned funds totaling $5,912 have not yet been returned. 6 students had miscalculations due to Pell not being recalculated for classes the student didn’t begin attendance prior to the R2T4 calculation which resulted in $1,342 of Pell under returned and $463 of federal direct loans (FDL) over returned. 4 students had miscalculations due to incorrect break days used resulting in $9 of Pell and $197 of FDL over returned. Cause: Complexity of R2T4 calculations. Break days not properly factored into the calculation. Pell not properly recalculated prior to the R2T4 calculation for classes students didn't begin attendance in. Effect: Noncompliance with R2T4 regulations Identification as repeat finding, if applicable: 2023-004 Recommendation: We recommend an individual in financial aid with the appropriate level of experience periodically review standard and modular students’ R2T4 calendars, calculations and returns to help ensure that internal controls over such processes can operate effectively and achieve compliance. We further recommend the University adjust procedures to identify whether any Pell recalculations are required to be completed first before the R2T4 calculation is completed. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Corrective Action Plan

Incorrect and Untimely Return of Title IV Funds Calculation (R2T4) Planned Corrective Action: See Below Cleary University identified compliance gaps in its Return of Title IV Funds (R2T4) reporting processes during the 2023-2024 award year. These issues stemmed from a lack of timely enforcement of procedures and misinterpretation of R2T4 regulatory requirements, necessitating immediate corrective action and leadership changes. The Financial Aid Director was dismissed, and an experienced Assistant Vice President (AVP) of Financial Aid was hired to oversee compliance and ensure accurate implementation of federal regulations. Additional Financial Aid Data Specialists were hired to improve system efficiency and accuracy. An R2T4 Task force was established, meeting weekly to review Last Day of Attendance (LDA) data, monitor student drop processes, and ensure timely R2T4 calculations and funds returned. A structured process for R2T4 calculations was put in place, with cross-referencing from the Records Department, maintaining through documentation, and improving tracking and reporting. Cleary University has taken significant steps to address the issues and ensure compliance with R2T4 regulations. The revised process, implemented in July 2024, aims to prevent future delays and findings. Weekly checks and ongoing training will ensure that R2T4 processing is accurate, timely, and fully complaint with federal requirements, with a target processing completion of 20 days. Person Responsible for Corrective Action Plan: JoAnn Ross, Vice President of Financial Aid Anticipated Date of Completion: December 18, 2024

Categories

Student Financial Aid Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Material Weakness Reporting

Other Findings in this Audit

  • 519610 2024-001
    Material Weakness Repeat
  • 519611 2024-001
    Material Weakness Repeat
  • 519612 2024-002
    Significant Deficiency
  • 519613 2024-002
    Significant Deficiency
  • 519614 2024-003
    - Repeat
  • 519615 2024-003
    - Repeat
  • 519616 2024-003
    - Repeat
  • 519617 2024-003
    - Repeat
  • 1096051 2024-001
    Material Weakness Repeat
  • 1096052 2024-001
    Material Weakness Repeat
  • 1096053 2024-001
    Material Weakness Repeat
  • 1096054 2024-002
    Significant Deficiency
  • 1096055 2024-002
    Significant Deficiency
  • 1096056 2024-003
    - Repeat
  • 1096057 2024-003
    - Repeat
  • 1096058 2024-003
    - Repeat
  • 1096059 2024-003
    - Repeat

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $5.49M
84.063 Federal Pell Grant Program $1.49M
84.007 Federal Supplemental Educational Opportunity Grants $74,929
84.033 Federal Work-Study Program $26,250