Finding Text
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 34 CFR 668.164(l), an institution must return to ED (notwithstanding any state law, such as a law that allows funds to escheat to the state) any Title IV funds, except FWS program funds, that it attempts to disburse directly to a student or parent but they do not receive or negotiate those funds. For FWS program funds, the institution is required to return only the federal portion of the payroll disbursements. If the institution attempted to disburse the funds by check and the check is not cashed, the funds must be returned no later than 240 days after the date it issued the check. If a check is returned, or an EFT is rejected, the institution may make additional attempts to disburse the funds, provided that the attempts are made no later than 45 days after the funds were returned or rejected. If the institution does not make an additional attempt to disburse the funds, the funds must be returned before the end of the 45-day period and no later than 240 days from the date of the initial attempt to disburse the funds. Condition / Context: Ten (10) out of a sample of 25 outstanding refund checks tested were yet not returned to the U.S. Department of Education. Eight (8) of the ten (10) had aged past the 240-day requirement. Questioned Costs: $7,408.87 Cause: Following the District?s receipt of refund checks, we noted that there is not a process for making contact with students within the initial 45-day period to resolve issues. Likewise, we noted there is not a process to ensure checks outside of the 45-day period are remitted back to ED. Effect: The District is not in compliance with the applicable Title IV regulations stating that all student refund checks that are outstanding for more than 240 days be returned to the U.S. Department of Education. Any additional attempts to disburse funds must be made no later than 45 days after the funds were returned or rejected. Repeat Finding: See prior year finding 2021-006. Recommendation: We recommend that the District review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education or disbursed to students as stated in the criteria mentioned above. Action taken in response to finding: The district has entered into a contract with Huron Consulting Group to address the internal controls pertaining to returning funds and reissuing funds back to students. District Finance has been working closely with each College to return funds to the Department of Education. Queries have been created to identify returned checks which will be monitored on a regular basis to reverse financial aid disbursements and re-report changes to COD. Planned completion date for corrective action plan: March 31, 2023.