Finding Text
Finding Number: 2024-002
Program: Student Financial Assistance Cluster
ALN #: 84.063 and 84.268
Pass-through Entity: N/A- Direct Award
Federal Agency: U.S. Department of Education
Federal Award Year: July 1, 2023 through June 30, 2024
Compliance Requirement: Cash Management
Type of Finding: Significant Deficiency
Criteria
An institution must credit a student’s account for the amount of Title IV funds the student is eligible to
receive and pay the amount of any credit balances due before the institution seeks reimbursement from ED
for those disbursements. The reimbursement request must include supporting documentation for the
disbursements. After the reimbursement request is approved, ED initiates an electronic funds transfer to
the institution’s account.
Additionally, Schools participating in the Direct Loan program are required to perform monthly Direct Loan
reconciliations (34 CFR 685.300(b)(5)). A school must reconcile the funds it received from G5 with actual
disbursement records the school submitted to COD. Each month, COD sends the school a School Account
Statement, which is ED’s official record of the school’s cash and disbursement records and identifies the
difference between the net draws from G5 and the actual disbursement information reported to COD by the
school. The school is required to account for any differences by reconciling ED’s records with the school’s
financial and business records.
Lastly, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal
control over federal awards that provide 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.
Conditions found
For a sample of three monthly bank reconciliations of the College’s main operating account, we noted there
was no evidence of review by the Controller. Management communicated that the review of the bank
reconciliation is part of the cash management process, but the Controller does not sign them. Each monthly
bank reconciliation contains a ‘Prepared by’ and ‘Reviewed by’ sign-off line. For each sample, the Senior
Staff Accountant signed off as the preparer, but the Controller did not sign off on the ‘Review by’ line.
Cause
Bank reconciliations are reviewed by the Controller, but there is no evidence that the control is properly
being performed.
Proper perspective
The College’s policy is for the Controller to review bank reconciliations to ensure proper drawdowns are
occurring. Out of a sample of three drawdowns, we noted the three bank reconciliations did not contain the
Controller’s signature indicating proper review and approval.
Possible asserted effect
Not reviewing the bank reconciliation could cause the College to submit requests for reimbursement through
the G5 system that are not complete or accurate.
Questioned costs
None noted.
Statistical sampling
The sample was not intended to be, and was not, a statistically valid sample.
Repeat finding
A similar finding was not reported in the prior year.
Recommendation
We recommend that the College require that the Controller sign the bank reconciliation upon completing
their review to signify that the reconciliation is complete and accurate.
View of responsible officials
The Controller was new to his position starting in December of 2023. He had reviewed all three of the bank
reconciliations selected for audit review. However, he was not aware that the reconciliation actually
required his signature per Emmanuel's policies and procedures to witness his review.