Finding Text
Finding 2022-002: Significant Deficiency ? Direct Loan Reconciliation Program: Student Financial Assistance Cluster Assistance Listing Number: 84.268 Federal Agency: U.S. Department of Education Federal Award Identification Number: P268K221186 Federal Award Year: June 30, 2022 Criteria: Title IV regulations note that Direct Loan reconciliation is a mandatory monthly process, as required under 34 CFR 685.300(b)(5). The U.S. Department of Education released an electronic announcement December 18, 2020 reminding institutions of this requirement. Each month, Common Origination and Disbursement (COD) provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the institution) Loan Detail records. The institution is required to reconcile these files to the institution?s financial records. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. Since up to three Direct Loan program years may be open at any given time, institutions may receive three SAS data files each month. Condition/Context: The College was not able to provide the three monthly reconciliations for November 2021, February 2022, or April 2022 when requested for the audit in the summer of 2022. The Institution noted that the reciliations had not been performed timely, and subsequently the Institution had a consultant complete these reconciliations. The auditors were unable to obtain evidence of or confirmation from the Institution regarding review of the reconciliations by someone other than the preparer occurred. The sample was not a statistically valid sample. Additionally, the College discovered that Direct Loan reconciliation hadn't been done correctly in the past due to staff turnover. A consultant was given the task of doing a complete 21-22 reconciliation in June 2022. This consultant discovered 16 students had been awarded $177,816 in error. The cause of this was that rules had not been setup correctly in Colleague, and consistent reconciliation by correcting Colleague and COD errors wasn't completed in a timely manner. The auditors obtained the listing of students awarded incorrectly. Cause: The College noted there was significant staffing issues/changes in key positions in the student financial aid office and business office and that resulted in the monthly reconciliations not being performed timely. Effect: The information in the College?s system or data reported to COD may be incorrect and not correctly timely if the monthly reconciliations are not occurring. Questioned costs: $177,816 of Federal Direct Loans assistance listing number 84.268. Recommendation: It is recommended that the College review staffing and policies and procedures to ensure that the monthly direct loan reconciliation is completed in a timely manner to facilitate compliance with Title IV regulations. Management?s Response: Management acknowledges the finding. For the $177,816 in direct loans incorrectly disbursed that was identified, the College returned the loans and replaced with institutional aid for the impacted students. The Assistant Director/Systems Specialist reconciles direct loans every month. The Executive Director of Financial Aid and the VP of Enrollment Management review these reports at the end of each month. In addition, a system adjustment has been set up for 2022-2023 to ensure reconciliation is done monthly. The Assistant Director/Systems Specialist utilizes Colleague variance reports that tracts Direct Loans disbursed year to date, the number that COD (Servicer for U.S. Department of Education) has approved, and the students that make up the variance, if any. In addition, COD and Colleague errors that occur during the import/export of Direct Loans to and from COD are corrected on a consistent basis. Reconciliation documentation is then forwarded to the Director for review.