Finding Text
2023-001 Department of Education
Student Financial Aid Cluster - 2022 - 2023 Award Year
ALN #84.063 - Federal Pell Grant Program
ALN #84.007 - Federal Supplemental Educational Opportunity Grants
ALN #84.033 - Federal Work-Study Program
ALN #84.268 - Federal Direct Student Loans
Cash Management - Heightened cash monitoring payment method
Significant deficiency in internal controls over compliance
Criteria: The College must comply with all of the requirements specified for the provisional certification
alternative in 34 CFR 668.175(f) which includes disbursing Title IV program funds under the heightened cash
monitoring 1 payment method (HCM1). Under HCM1, the College must first make disbursements to eligible
students/parents and pay any remaining credit balances before it requests or receives funds for the amount of
those disbursements from the Department of Education. All credit balances must be paid to students/parents
prior to draw down of funds, even if the student/parent signed a credit balance authorization in the past.
Condition: During testing of cash management, which includes disbursing of Title IV program funds under
HCM1, a sample of 11 students was selected from the population of students receiving Title IV funding during
fiscal year 2023. From this selection of students, the following deficiencies were noted where the College
received Title IV payments from the Department of Education before either applying the funds to the students
account or clearing any credit balances owed to the student/parent that were created by applying the funds to
the students account.
• Pell Grants – 10 of the 19 disbursements
• Subsidized Loans – 17 of the 30 disbursements
• Unsubsidized Loans – 18 of the 29 disbursements
• Plus Loans – 4 of the 6 disbursements
• FSEOG Grants – 9 of the 14 disbursements
Cause: The College did not react quickly enough to address the requirements of the HCM1 payment method.
Effect: The College received funding from the Department of Education prior to following the HCM1 payment
method.
Questioned Costs: None reported.
Context/Sampling: The College was initially notified on April 21, 2022 that it did not meet the financial
responsibility standard. However, the College appealed the decision from this letter and was not notified until
January 6, 2023 that is must comply with the decision of the April 21, 2022 letter and obtain provisional
certification which included the HCM1 payment method. Of the 58 exceptions noted above, 53 occurred during
the Fall 2022 semester prior to receiving the final notification from the Department of Education.
Recommendation: We recommend that staff attend training to strengthen their knowledge of cash
management practices and that processes and procedures relating to cash management are continually
reviewed and updated.
Views of Responsible Officials: Management agrees with the finding.