Finding Text
FINDING #2024-003 – INTERNAL CONTROLS OVER FEDERAL AWARDS
Federal Agency: U.S. Department of Education
Federal Program Title: Student Financial Assistance Cluster
Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268
Award Period: July 1, 2023 to June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or Specific Requirement: In accordance with 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition / Context: During our audit procedures, we noted instances where students are overpaid student financial aid due to changes in student units. The amounts reported to the Common Origination and Disbursement system were correctly reported resulting in the overpayment being disbursed from the District’s funds. The District is paying students based on census enrollment and not adjusting for any changes in enrollment.
Questioned Costs: None.
Cause: Inadequate controls over student information changes allowing the institution to identify changes in enrollment and adjust financial aid accordingly.
Effect: Overpayment by the District where the District must use funds from the General Fund to cover the overpayment.
Repeat Finding: Yes.
Recommendation: We recommend the institution review its processes over student information changes and ensure that students are being awarded the proper amount of financial aid based on enrollment at the time of disbursement to prevent having to cover overpayments through the General Fund.
Corrective Action Plan: These initial Pell overpayments were incurred in the “early” Pell disbursements that occurred a week before the semester started and the first two weeks of the semester. The enrollment was reported correctly, but part of the issue was the current FA system (SAM) was not programmed to adjust the amount disbursed based on the student’s current enrollment at the time of disbursement. For the Spring 2024 semester, testing was done on SAM to disburse aid based on current enrollment for the early Spring 2024 disbursements. This change reduced the amount in overpayments if students drop below ½ time for the semester, or withdrew completely.
In addition, the Financial Aid Office transitioned from SAM to the Colleague Financial Aid System (starting in 2024-25). Colleague is already programmed to disburse aid based on current enrollment status, so this will not be a recurring issue in the future.
Early Disbursement and Overpayment Notes:
• For Fall 2023 semester, the first early Pell disbursement was based on 25% of a student’s semester award based on full-time enrollment. If a student is currently enrolled ½-time or higher when this disbursement is processed, they will receive the 25% award amount. If a student is enrolled in less than ½-time status (.5 units to 5.5 units), they will receive a $500 Pell disbursement to account for the lower Pell grant award for less than ½-time students.
• For Spring 2024 semester, after testing in SAM, we were able to disburse the early disbursements based on the current enrollment before Census which lowered the overpayment amount significantly.
• We understand students add/drop courses through the first two weeks of the semester. The final Pell grant award for the semester is adjusted to the student’s enrollment status on Census day. Students who are ½-time or higher at Census will not be a Pell overpayment for the semester since their Pell grant award will be at 50% or higher.
• For students who were enrolled at ½-time or higher at the time the early disbursement was processed, but then dropped to less than ½-time or withdrew completely by Census day, they will be considered a Pell overpayment.
o These types of overpayments are unavoidable.
o Example: Currently, if a student is scheduled a $500 disbursement for the early 25% disbursement, and is enrolled ½ time, they will receive $500. With the change to actual enrollment (1/2 time for this case), the student will receive $250 instead of $500. If the student drops below 1/2-time or withdraws completely by census, the highest overpayment amount will be $250 instead of $500.