Finding Text
FINDING #2022 ? 002: INTERNAL CONTROLS OVER FEDERAL AWARDS Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063 and 84.268 Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or Specific Requirement: In accordance with 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition / Context: During our audit procedures, we noted that a formal documented review process was not available for the following areas: ? R2T4 calculations [Berkeley City College and Merritt College] ? Student award packaging [Merritt College] ? Students selected for verification by the Department of Education [Merritt College] Furthermore, because the Financial Aid Director positions were vacant, reconciliations performed by the loan officers were not reviewed for: ? Pell Grant and Supplemental Education Opportunity Grant [Berkeley and Merritt College] ? Direct Loan [Berkeley City College] Questioned Costs: None. Cause: The Colleges' Financial Aid Director positions were vacant at June 30, 2022, resulting in an oversight. Effect: A lack of internal controls can result in noncompliance with provisions of the various programs within the Student Financial Assistance Cluster. Repeat Finding: See prior year finding 2021-004. Recommendation: We recommend the Colleges reinforce their review processes, monitor proper follow-up on audit findings, and review all activity level controls to ensure compliance with the various requirements of the Student Financial Assistance Cluster.Action taken in response to finding: The district has entered into a contract with Huron Consulting Group to address internal controls pertaining to reconciliation of Title IV funds, R2T4 processing, award packaging and verification. Huron has created more robust packaging and disbursement rules to ensure only eligible students are awarded and paid. Additionally, the district has created business processes and procedures to improve internal controls over federal awards. While the cutoff date for the audit was missed for the 2021-2022 school year, corrective actions have been taken to ensure the reconciliation of Title IV funds and secondary reviews have been completed and are currently underway for 2022-2023. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Planned completion date for corrective action plan: June 30, 2023.