Finding 6667 (2023-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2023-12-28
Audit: 8642
Organization: The Art Institute of Chicago (IL)
Auditor: Mitchell Titus

AI Summary

  • Core Issue: The institution failed to accurately calculate and timely return Title IV funds when students withdrew, violating federal regulations.
  • Impacted Requirements: Noncompliance with 34 CFR 668.22(e) and (j) regarding the return of Title IV funds.
  • Recommended Follow-Up: Implement internal controls to ensure accurate calculations and timely returns of Title IV funds as per federal guidelines.

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.

Corrective Action Plan

THE ART INSTITUTE OF CHICAGO Corrective Action Plan For the Year Ended June 30, 2023 2023-001 Inadequate Control over Return of Title IV Funds- Student Financial Aid Cluster -Assistance Listing Number 84.063, 84.268, Grant Period -Year Ended June 30, 2023. Condition Found 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. Corrective Action Plan The Art Institute of Chicago has updated all student accounts and returned all funds. The Student Financial Services office will implement two additional procedures to the withdrawal/R2T4 process to ensure that they are processed accurately and timely. 1. A weekly Complete Withdrawal report will be run in PeopleSoft Campus Solutions and reviewed by the Associate Director of Financial Aid Processing. The report lists all students who have fully withdrawn after the add/drop period and through the end of the semester. The Associate Director will compare the list to the R2T4s that have been completed to identify and confirm that all R2T4s have been completed timely for all withdrawn recipients of federal student aid. 2. The Director of Student Financial Services, or an appropriately trained staff person as assigned, will perform a review of all completed R2T4 forms. This review will be conducted to ensure that the calculations are correct and that the adjustments to any federal funds as determined by the R2T4 calculations have been input correctly in PeopleSoft Campus Solutions. Documentation of the review of each R2T4 from the semester will be maintained on a spreadsheet by the Director of Student Financial Services. Responsible Persons for Corrective Action Plan Patrick James, Director of Student Financial Services Sherman Lee, Associate Director of Financial Aid Processing Implementation Date of Corrective Action Plan Immediately

Categories

Student Financial Aid Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Significant Deficiency

Other Findings in this Audit

  • 6668 2023-001
    Significant Deficiency
  • 583109 2023-001
    Significant Deficiency
  • 583110 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $31.07M
84.063 Federal Pell Grant Program $2.85M
84.038 Federal Perkins Loan Program - Federal Capital Contributions $1.05M
84.033 Federal Work-Study Program $545,549
84.425 Covid-19 - Education Stabilization Fund $394,181
84.007 Federal Supplemental Educational Opportunity Grants $278,210
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $76,039
47.079 Office of International Science and Engineering $69,252
45.149 Promotion of the Humanities_division of Preservation and Access $38,434
45.024 Promotion of the Arts_grants to Organizations and Individuals $20,000
94.007 Program Development and Innovation Grants $3,600
43.001 Science $282