FAC Explorer

Finding 563792 (2024-002)

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 Pell Grant funds due to an error during the re-packaging process.
  • Impacted Requirements: The University failed to comply with federal regulations requiring accurate awarding of Pell Grant funds.
  • Recommended Follow-Up: Review and improve internal controls to ensure proper awarding of financial assistance in the future.

Finding Text

2024-002— Federal Pell Grant Program Eligibility U.S. Department of Education Student Financial Assistance Programs Cluster Federal Pell Grant Program (84.063) Federal Award Year: 2023-2024 Repeat Finding: No Criteria The Code of Federal Regulations (34 CFR 690) requires that the University provides Federal Pell Grant Program funds to eligible students enrolled in eligible undergraduate programs and certain eligible post-baccalaureate teacher certificate programs 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 Federal Pell Grant Program funds. Condition The University did not properly award Federal Pell Grant Program 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 re-packaging process performed by the University when the student returned to active status, an employee of the University incorrectly did not award the funds for the spring 2024 term. Effect Noncompliance with federal regulations could result in heightened monitoring by the U.S. Department of Education. Context We tested 40 students who received Federal Pell Grant Program 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 Federal Pell Grant Program funds during the award period and was not awarded the correct amount of these 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 2024-002 – Eligibility - Pell Finding: Herzing University did not properly award Pell funding to an eligible student in the Spring 2024 semester. Condition: A student was eligible to receive Pell funding but did not receive Pell 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 Pell funding but did not receive Pell funds due to an employee error. Action Taken: The identified student withdrew from the University on May 8, 2023. The student’s 2023-24 Pell award was cancelled during the required R2T4 process that was completed on May 23, 2023. The 2023-24 Pell award for the Spring 2024 semester was not manually reinstated upon the student’s return to an Active status on June 28, 2023. The employee who was responsible for updating the student’s financial aid package upon the student’s return to an Active status erroneously neglected to reinstate the 2023-24 Pell award for the Spring 2024 semester. This finding is attributed to human error. In April 2025, Herzing University created an internal compliance checkpoint for Pell awarding. This checkpoint will identify any students with a Pell eligible SAI for the Federal Award year that do not have Pell packaged for the semester. This checkpoint was completed for the Spring 2025 semester on April 7, 2025, and will be completed each semester going forward. Any affected students identified during the completion of this semester-based checkpoint will have their financial aid package revised to include Pell funding for the applicable semester, prior to the end of the semester. Herzing University’s Policy Manual was updated in April 2025 to reflect the addition of the Pell Awarding compliance checkpoint. For the identified student, Herzing University has provided a tuition waiver for the amount of the Pell funds that the student was eligible for and should have received for the Spring 2024 semester. The required corrective action for Finding 2024-002 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

  • 563791 2024-001
    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