Finding Text
Program Information:
Federal Direct Loan Program (ALN: 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation):
Cash Management - Institutions are permitted to draw down Title IV funds prior to disbursing funds to eligible students and parents. The institution’s request must not exceed the amount immediately needed to disburse funds to students or parents. A disbursement of funds occurs on the date an institution credits a student’s account or pays a student or parent directly with either student financial aid funds or institutional funds. The institution must make the disbursements as soon as administratively feasible, but no later than 3 business days following the receipt of funds. Any amounts not disbursed by the end of the third business day are considered to be excess cash and generally are required to be promptly returned to the U.S. Department of Education (the “ED”) (34 CFR section 668.166(a)(1)). Excess cash includes any funds received from the ED that are deposited or transferred to the institution’s Federal account as a result of an award adjustment, cancellation, or recovery. However, an excess cash balance is allowed and considered tolerable if that balance: (1) is less than one percent of its prior-year drawdowns; and (2) is eliminated within the next 7 calendar days (34 CFR sections 668.166(a) and (b)).
Condition:
Certain instances were identified during the year in which funds drawn were held in excess of the allowable time frame.
Cause:
Administrative oversight with respect to Cash Management compliance requirements.
Effect or Potential Effect:
The Organization is not in compliance with Cash Management compliance requirements.
Questioned Costs:
None.
Context:
During our testing, we identified 3 instances of cash held in excess of allowable time frames for the Federal Direct Loan Program as noted below:
Repeat Finding:
No similar findings noted in the prior year.
Recommendation:
We recommend that the Organization enhance its procedures to ensure that excess cash is returned timely.
Views of Responsible Officials and Planned Corrective Actions:
Through 9/13/22, PCOM used a Banner generated report to draw down direct loan funds. PCOM found there was an error with the Banner report causing excess funds to be drawn on 6/30/22, 8/2/22 and 8/31/22.
With the assistance of the Student Services department a new process to draw direct loans began in November 2022. The process compares disbursements recorded by the Department of Education's Common Origination and Disbursement (COD) website to that of the disbursements paid in PCOM’s ERP information system. The finance department ensures the amount to be drawn from COD is either less than or matches the available funds on the COD site.
Since the implementation of the new process there have been no drawdowns that resulted in an excess cash situation.