Finding Text
Finding 2024-001: Excess Cash – Student Financial Aid
Federal Agency: U.S. Department of Education
Program Name: Student Financial Assistance Cluster, Federal Direct Student Loans
Assistance Listing Number: 84.268
Award Year: June 1, 2023 – May 31, 2024
Program Expenditures: $202,369,164
Questioned Costs: None
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 designed 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.
Condition: The Chicago School (the College) had one instance of excess cash for the Federal Direct Student Loan program. During our cash management testing, we identified the College had excess cash for the Direct Loan program ranging from $528,450 to $1,238,306 for the period from November 13, 2023 to December 18, 2023. For that period, the excess cash did not exceed one percent of total prior year drawdowns; however, amounts were not returned with a seven-day period.
Cause: College officials stated the excess cash resulted from the College’s practice of drawing a portion of funds to ensure timely disbursement of stipend payments to students while the reconciliation of awards was still in progress. While this approach aligns with the College’s commitment to promptly provide financial support, an administrative oversight occurred during the reconciliation process. Specifically, the College did not net out the prior drawdown for stipends when calculating subsequent fund requests.
Effect: Excess cash is noncompliance with Federal regulations and could result in heightened monitoring by the U.S. Department of Education.
Questioned Costs: None
Context: For the period of November 13, 2023 to December 18, 2023, the College had excess cash in the amount ranging from $528,450 to $1,238,306. The College held excess cash for a period of 24 business days.
Repeat Finding: No.
Recommendation: We recommend the College strengthen internal controls around cash management to prevent or timely correct excess cash instances.
Views of Responsible Officials: Management agrees with the finding. Please see corrective action plan attached.