Finding Text
Criteria
According to 34 CFR 668.164(l):
(1) Notwithstanding any State law (such as a law that allows funds to escheat to the State), an institution must return to the Secretary any title IV, Higher Education Act (“HEA”) program funds, except Federal Work Study (“FWS”) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the Federal portion of the payroll disbursement.
(2) If an EFT to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the Secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued the check.
Condition
Federal regulations require an institution to return unclaimed Title IV funds issued by check or EFT within 240 days. During our testing, we noted 9 students, out of a sample of 13, that had unclaimed funds exceeding the federal day limit by 64-717 days.
Cause
Accounts are reviewed and reconciled routinely. However, the College did not monitor outstanding checks or unclaimed funds over 240-days due to Title IV as the business office was not aware of 240-day timeframe to require unclaimed Title IV funds.
Effect
The College did not return Title IV unclaimed funds to the Department of Education within the required 240-day time frame.
Questioned Costs
There were 9 outstanding checks totaling $986, which pertained specifically to federal-sourced funds.
Perspective
Our sample was not, and was not intended to be, statistically valid. Of the 13 students selected for testing, 9 students, or 69.23% of our sample, had unclaimed funds pertaining to federal sources that were not returned to the Department of Education within the 240-day required time frame.
Identification as a Repeat Finding, if applicable
See finding 2023-003 included in the summary schedule of prior year findings.
Recommendation
The College should examine its policies and procedures related to unclaimed funds including the process and time frame for identifying aged balances and the process for cancelling checks and returning funds to the Department of Education. Moreover, the College should provide training to employees responsible for reviewing and processing information to ensure that they have adequate knowledge in the related rules and regulations.
View of Responsible Officials
The College agrees with the finding and has implemented the corrective action plan listed within the management corrective action plan section of this report.