Finding Text
Finding 2024-001 - Significant Deficiency, Compliance
Federal Award No. 84.063, 84.268
U.S. Department Of Education
Student Financial Aid Cluster – Cash Management
Criteria: The U.S. Department of Education (ED) may place institutions on a Heightened Cash Monitoring (HCM) payment method to provide additional oversight of cash management. The College was placed on Heightened Cash Monitoring 1 (HCM1) as a requirement of its provisional approval of its program participation agreement. HCM1 requires that the College makes disbursements to eligible students from institutional funds and submits disbursement records to the Common Origination and Disbursement (COD) System before drawing down funds to cover those disbursements from G5. The College must also pay any credit balance due under 34 CFR 668.14(h), before it submits a request for funds.
Condition: In our nonstatistical sample of 3 cash drawdowns, we noted 2 cash drawdowns completed in Fall 2023 for which refunds were not paid students from institutional funds prior to the funds being drawn down from G5 as required by the Heightened Cash Monitoring 1 requirements. We noted no instances of noncompliance for the Spring 2024 drawdown tested.
Context: For the drawdown of Pell grant funds requested on September 15, 2023 and deposited on September 18, 2023 the College did not pay student refunds until September 19, 2023. The disbursement to the student accounts occurred on September 13, 2023, therefore funds were appropriately requested to cover fall awards; however, for any student for which the federal aid awards exceed the institutional charges, the College is required to pay the student refund prior to completing the drawdown for those students. For the drawdown of Direct Loan funds requested on September 29, 2023 and deposited on October 2, 2023 the College did not pay student refunds until October 4, 2023. The disbursements to the student accounts occurred on September 27, 2023 and September 28, 2023, therefore these funds were appropriately requested to cover fall awards; however, for any student for which the federal aid awards exceed the institutional charges, the College is required to pay the student refund prior to completing the drawdown for those students.
Effect: The College is not meeting the requirements of heightened cash monitoring regulations.
Questioned Costs: None noted.
Cause: Bethany College did not have proper processes and related controls in place to ensure that heightened cash monitoring requirements were being met in the Fall 2023 semester.
Indication Of Repeat Finding: This is not a repeat finding.
Recommendation: The Financial Aid department and business office should put in place controls that would ensure that heightened cash monitoring requirements are met and that student refunds that are generated by federal awards are paid prior to drawing down funds.
Views Of Responsible Officials (Unaudited): The College concurs with the finding and has adjusted its processes and controls beginning with the Spring 2024 semester to conduct a review of students for which refund payments need to be made prior to drawing down funds from G5.
Completion Date: February 2024
Contact Person: Steven W. Eckman, President