Finding 547252 (2024-003)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-03-31
Audit: 351580
Organization: Johnson C. Smith University (NC)
Auditor: Bdo USA PC

AI Summary

  • Core Issue: The University failed to provide necessary documentation for one student selected for verification, leading to potential non-compliance with federal regulations.
  • Impacted Requirements: Verification procedures for federal financial aid programs were not followed, risking improper disbursement of funds.
  • Recommended Follow-Up: Enhance internal controls and establish formal policies to ensure all verification processes are accurately performed and regularly reviewed.

Finding Text

Federal Program Information: Federal Supplemental Educational Opportunity Grants (ALN: 84.007), Federal Work-Study Program (ALN: 84.033), Federal Pell Grant Program (ALN: 84.063), and Federal Direct Student Loans (ALN: 84.268) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Test and Provisions – Verification - An institution shall require an applicant selected for verification to submit acceptable documentation that will verify or update the following information used to determine the applicant's EFC: adjusted gross income, U.S. income tax paid, aggregate number of family members in the household, number of family members in the household who are enrolled in as at least half-time students in postsecondary educational institutions if that number is greater than one and untaxed income subject to U.S. income tax reporting requirements in the base year which is included on the tax return form, excluding information contained on schedules appended to such forms. Untaxed income and benefits include: Social Security benefits if the institution has reason to believe that those benefits were received and were not reported or were not correctly reported; child support if the institution has reason to believe child support was received; U.S. income tax deductions for a payment made to an individual retirement account or Keough account; interest on tax-free bond; foreign income excluded from U.S. income taxation if the institution has reason to believe that foreign income was received; and all other untaxed income subject to U.S. income tax reporting requirements in the base year included on the tax return form, excluding information contained on schedules appended to such forms. (34 CFR section 668.56). Condition: For certain students selected for verification, supporting documentation for the information required to be verified could not be provided by the University. Cause: Insufficient administrative oversight and internal controls with respect to verification procedures. Effect or Potential Effect: Federal awards were not disbursed in accordance with federal regulations, and the University was not in compliance with verification compliance requirements. Questioned Costs: Unknown. Context: For 1 of 15 students selected for verification testing, the University did not perform appropriate verification procedures. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the University enhance its internal controls and implement formal policies and procedures over the applicable compliance requirements to ensure that the appropriate verification procedures are performed for all students who are selected for verification unless excluded by the federal regulations. Views of Responsible Officials: The verification for one student was improperly conducted, leading to financial aid awards and disbursements based on unverified or incorrectly verified financial data, specifically regarding untaxed IRA distributions and pensions. The verification failure was due to an oversight by the aid administrator who incorrectly verified the untaxed IRA distribution and pension as zero, despite contradictory evidence or a lack of supporting documentation. The University partnered with Financial Aid Services (“FAS”) in February 2025 to review the current systems and process, and devise appropriate systems, checks, and balances to address each deficiency in our financial aid processes and personnel. Resulting from the work of FAS, the verification policies will be thoroughly reviewed, and revised, to ensure comprehensive coverage as mandated by federal regulations. The University will also establish a robust quality control system to regularly review verification practices and compliance, ensuring adherence to updated policies. We will update and maintain a verification checklist that includes all data elements required for verification. This checklist will be used in all verifications, with a secondary review and sign-off by another trained administrator to ensure accuracy and completeness. In addition, we will bolster training for all financial aid staff, utilizing resources from FAS and the National Association of Student Financial Aid Administrators (NASFAA) to deepen understanding and expertise in verification processes.

Categories

Internal Control / Segregation of Duties Student Financial Aid Reporting Matching / Level of Effort / Earmarking Special Tests & Provisions

Other Findings in this Audit

  • 547245 2024-001
    Significant Deficiency
  • 547246 2024-001
    Significant Deficiency
  • 547247 2024-001
    Significant Deficiency
  • 547248 2024-002
    Significant Deficiency
  • 547249 2024-002
    Significant Deficiency
  • 547250 2024-003
    Significant Deficiency
  • 547251 2024-003
    Significant Deficiency
  • 547253 2024-003
    Significant Deficiency
  • 547254 2024-004
    Significant Deficiency
  • 547255 2024-005
    Significant Deficiency
  • 547256 2024-005
    Significant Deficiency
  • 547257 2024-005
    Significant Deficiency
  • 547258 2024-005
    Significant Deficiency
  • 547259 2024-006
    Significant Deficiency
  • 547260 2024-006
    Significant Deficiency
  • 547261 2024-007
    Significant Deficiency
  • 547262 2024-007
    Significant Deficiency
  • 547263 2024-007
    Significant Deficiency
  • 547264 2024-008
    Material Weakness Repeat
  • 547265 2024-008
    Material Weakness Repeat
  • 547266 2024-008
    Material Weakness Repeat
  • 547267 2024-008
    Material Weakness Repeat
  • 547268 2024-008
    Material Weakness Repeat
  • 547269 2024-008
    Material Weakness Repeat
  • 547270 2024-009
    Significant Deficiency Repeat
  • 547271 2024-009
    Significant Deficiency Repeat
  • 547272 2024-010
    Significant Deficiency Repeat
  • 547273 2024-010
    Significant Deficiency Repeat
  • 547274 2024-010
    Significant Deficiency Repeat
  • 547275 2024-011
    Material Weakness Repeat
  • 547276 2024-011
    Material Weakness Repeat
  • 547277 2024-012
    Significant Deficiency Repeat
  • 547278 2024-012
    Significant Deficiency Repeat
  • 1123687 2024-001
    Significant Deficiency
  • 1123688 2024-001
    Significant Deficiency
  • 1123689 2024-001
    Significant Deficiency
  • 1123690 2024-002
    Significant Deficiency
  • 1123691 2024-002
    Significant Deficiency
  • 1123692 2024-003
    Significant Deficiency
  • 1123693 2024-003
    Significant Deficiency
  • 1123694 2024-003
    Significant Deficiency
  • 1123695 2024-003
    Significant Deficiency
  • 1123696 2024-004
    Significant Deficiency
  • 1123697 2024-005
    Significant Deficiency
  • 1123698 2024-005
    Significant Deficiency
  • 1123699 2024-005
    Significant Deficiency
  • 1123700 2024-005
    Significant Deficiency
  • 1123701 2024-006
    Significant Deficiency
  • 1123702 2024-006
    Significant Deficiency
  • 1123703 2024-007
    Significant Deficiency
  • 1123704 2024-007
    Significant Deficiency
  • 1123705 2024-007
    Significant Deficiency
  • 1123706 2024-008
    Material Weakness Repeat
  • 1123707 2024-008
    Material Weakness Repeat
  • 1123708 2024-008
    Material Weakness Repeat
  • 1123709 2024-008
    Material Weakness Repeat
  • 1123710 2024-008
    Material Weakness Repeat
  • 1123711 2024-008
    Material Weakness Repeat
  • 1123712 2024-009
    Significant Deficiency Repeat
  • 1123713 2024-009
    Significant Deficiency Repeat
  • 1123714 2024-010
    Significant Deficiency Repeat
  • 1123715 2024-010
    Significant Deficiency Repeat
  • 1123716 2024-010
    Significant Deficiency Repeat
  • 1123717 2024-011
    Material Weakness Repeat
  • 1123718 2024-011
    Material Weakness Repeat
  • 1123719 2024-012
    Significant Deficiency Repeat
  • 1123720 2024-012
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $10.89M
84.063 Federal Pell Grant Program $4.74M
11.028 Connecting Minority Communities Pilot Program $2.35M
84.031 Higher Education Institutional Aid $555,668
84.007 Federal Supplemental Educational Opportunity Grants $480,658
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $446,604
84.042 Trio Student Support Services $441,950
84.120 Minority Science and Engineering Improvement $427,368
84.033 Federal Work-Study Program $390,521
93.317 Emerging Infections Programs $363,742
84.217 Trio McNair Post-Baccalaureate Achievement $322,726
84.047 Trio Upward Bound $256,358
47.076 Stem Education (formerly Education and Human Resources) $137,979
15.932 Preservation of Historic Structures on the Campuses of Historically Black Colleges and Universities (hbcus). $63,530
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $51,145
93.310 Trans-Nih Research Support $48,409
45.313 Laura Bush 21st Century Librarian Program $40,928
12.598 Centers for Academic Excellence $32,974
97.062 Scientific Leadership Awards $27,918
84.335 Child Care Access Means Parents in School $23,238
17.268 H-1b Job Training Grants $20,962
97.061 Centers for Homeland Security $17,900
11.417 Sea Grant Support $14,474
54.001 Intelligence Community Centers for Academic Excellence $11,094
89.003 National Historical Publications and Records Grants $6,956
84.425 Education Stabilization Fund $4,647
93.859 Biomedical Research and Research Training $1,550