FAC Explorer

Finding 563791 (2024-001)

Significant Deficiency
Requirement
E
Questioned Costs
-
Year
2024
Accepted
2025-06-04
Audit: 358003
Organization: Herzing University, Ltd. (WI)
Auditor: Rsm US LLP

AI Summary

  • Core Issue: One eligible student did not receive Federal Supplemental Educational Opportunity Grant (FSEOG) funds due to an internal error during the award process.
  • Impacted Requirements: Compliance with federal regulations (34 CFR 676.21(a) and 2 CFR 200.303) regarding proper awarding of FSEOG funds was not met.
  • Recommended Follow-Up: The University should review and improve its internal controls and processes to ensure accurate awarding of financial assistance in the future.

Finding Text

2024-001— Federal Supplemental Educational Opportunity Grants Eligibility U.S. Department of Education Student Financial Assistance Programs Cluster Federal Supplemental Educational Opportunity Grants (84.007) Federal Award Year: 2024-2025 Repeat Finding: No Criteria The Code of Federal Regulations (34 CFR 676.21(a)) requires that the Federal Supplemental Educational Opportunity Grants (FSEOG) program provides grants to eligible undergraduate students who have not previously earned a bachelor’s or first professional degree. Priority is given to Federal Pell Grant Program recipients who have the lowest Expected Family Contribution (EFC). The Code of Federal Regulations (2 CFR 200.303) requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate awarding of FSEOG funds. Condition The University did not properly award FSEOG funds to one student. Out of the 40 students tested, we noted one student (2.5%) who was eligible to receive the funds during the award period and was not awarded the funds. The University’s internal control activities did not properly identify and correct this compliance finding above. Cause During the packaging process, an employee of the University incorrectly cancelled the award to the student. Effect Noncompliance with federal regulations could result in heightened monitoring by the U.S. Department of Education. Context We tested 40 students who received FSEOG funds. For each student tested, management provided documentation showing the student’s Cost of Attendance (COA), EFC, and awards granted to each student. Out of the 40 students tested, we noted one student (2.5%) who was eligible to receive the FSEOG funds during the award period and was not awarded the funds. Questioned costs There were no questioned costs with respect to this finding. Recommendation We recommend that the College review current processes and controls in place in order to ensure that future student financial assistance is properly awarded. Views of responsible officials Management agrees with this finding. See corrective action plan.

Corrective Action Plan

Audit Firm: RSM US LLP 30 S Wacker Drive, Suite 3300 Chicago, IL 60606 Audit Period: 1/1/2024 – 12/31/2024 Comments on Findings and Recommendations: Finding 2024-001 – Eligibility - SEOG Finding: Herzing University did not properly award SEOG funding to an eligible student in the Fall 2024 semester. Condition: A student was eligible to receive SEOG funding but did not receive SEOG funds due to an employee error. For one out of 40 students tested for eligibility, we noted 1 student (2.5%) who was eligible to receive SEOG funding but did not receive SEOG funds due to an employee error. Action Taken: On May 1, 2024, a Financial Aid Advisor manually cancelled the identified student’s 2024-25 SEOG award in Regent (Herzing University’s Financial Aid Management Software), with a notation that the student had an ineligible Student Aid Index (SAI). The student had an SAI of -117 on their 2024-25 ISIR, and in accordance with Herzing University’s FSEOG policy were eligible for 2024-25 SEOG in the Fall 2024 semester. The award was incorrectly manually canceled by the advisor because of human error. In April 2025, Herzing University created an internal compliance checkpoint for FSEOG awarding. This checkpoint will serve as a safety net to identify any students who have a Pell award for the Federal Award year, have an SAI that is FSEOG eligible according to Herzing University’s FSEOG policy, and do not correctly have FSEOG packaged for the semester. Any affected students identified during the completion of this semester-based checkpoint will have their financial aid package reviewed and if necessary revised to include FSEOG funding for the applicable semester, prior to the end of the semester. This checkpoint was completed for the Spring 2025 semester on April 4, 2025, and will be completed each semester going forward. Herzing University’s Policy Manual was updated in April 2025 to reflect the addition of the FSEOG Awarding compliance checkpoint. For the identified student, Herzing University has provided a tuition waiver for the amount of the FSEOG funds that the student was eligible for and should have received for the Fall 2024 semester. The required corrective action for Finding 2024-001 listed in the SFA audit for the period 1/1/2024 – 12/31/2024 was completed on 5/7/2025. The person responsible for completion of the corrective action was Kevin McShane, Vice President of Financial Aid & Compliance. ____________________________________ _______________________ Kevin McShane Date Vice President of Financial Aid & Compliance Herzing University 275 W. Wisconsin Ave., Ste. 210, Milwaukee, WI 53203 Email Address: kmcshane@herzing.edu

Categories

Student Financial Aid Subrecipient Monitoring Eligibility Internal Control / Segregation of Duties

Other Findings in this Audit

  • 563792 2024-002
    Significant Deficiency
  • 1140233 2024-001
    Significant Deficiency
  • 1140234 2024-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $117.29M
84.063 Federal Pell Grant Program $34.78M
93.364 Nursing Student Loans $1.62M
84.007 Federal Supplemental Educational Opportunity Grants $1.28M
84.033 Federal Work-Study Program $832,841
93.732 Mental and Behavioral Health Education and Training Grants $579,917
93.264 Nurse Faculty Loan Program (nflp) $571,861
84.038 Federal Perkins Loan Program_federal Capital Contributions $446,557
17.280 Wioa Dislocated Worker National Reserve Demonstration Grants $361,676
84.116 Fund for the Improvement of Postsecondary Education $218,154
84.335 Child Care Access Means Parents in School $138,050
32.001 Communications Information and Assistance and Investigation of Complaints $19,371
84.031 Higher Education Institutional Aid $6,204