Finding Text
Finding: 2023-001 Inadequate Control over Return of Title IV Funds
Finding Type: Noncompliance, Significant Deficiency in Internal Control
Identification of the Federal Program(s):
U.S. Department of Education:
#84.063 – Federal Pell Grant Program
#84.268 – Federal Direct Student Loans
(both part of the Student Financial Assistance Cluster)
Criteria:
When a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV grant or loan assistance that the student earned as of the student's withdrawal date in accordance with paragraph 34 CFR 668.22(e).
Per 34 CFR 668.22(j)(1), an institution must return the amount of Title IV funds for which it is responsible under paragraph (g) of this section as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew as defined in paragraph (l)(3) of this section.
Condition:
The institution did not accurately calculate the return of Title IV funds and return the funds in a timely manner, as required by the federal regulations.
Cause:
The Institute did not consistently implement its internal controls to ensure that the return of Title IV funds was correctly calculated and reported in a timely manner.
Effect:
The inaccurate calculation and late return of the Title IV funds is a violation of the federal regulations and could result in potential questioned costs.
Questioned Costs:
None.
Context:
The R2T4 refers to the calculation required when a recipient of Title IV aid withdraws from an institution during a payment period/period of enrollment in which the recipient began attendance. Of a sample of 11 students who withdrew from the Institute during the fiscal year under audit, we noted four exceptions, as follows:
In two instances, the amounts per R2T4 did not agree with the amounts returned to the grantor and resulted in both an overpayment and underpayment of $1,000 by the Institute.
In two instances, the R2T4 process was completed late based on the student withdrawal dates of 2/27/23 and 3/29/23, respectively. In both instances, the R2T4 forms were not completed until 6/27/23, which was 75 days and 45 days late, respectively.
Identification of repeated finding:
None.
Recommendation:
We recommend that the Institute adheres to the federal guidance as required per 34 CFR 668.22(e) and (j) relating to student withdrawals to ensure accurate calculation and timely return of Title IV funds to the U.S. Department of Education.
View of Responsible Officials and Corrective Action Plan:
Client agreed with the finding and recommendation. See management’s corrective action plan on page 14.