FAC Explorer

Finding 7848 (2023-001)

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Requirement
E
Questioned Costs
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Year
2023
Accepted
2024-01-08
Audit: 10206
Organization: The Cleveland Institute of Art and Subsidaries (OH)
Auditor: Maloney + Novotny LLC

AI Summary

  • Core Issue: The College's controls for awarding Pell Grants were inadequate, leading to incorrect disbursements.
  • Impacted Requirements: Compliance with Title IV regulations was not met, resulting in one student underpaid by $1,724.
  • Recommended Follow-Up: Implement stronger internal controls before disbursing funds and reconfigure systems to prevent future errors.

Finding Text

Program: Federal Pell Grant Program CFDA 84.063. Criteria: Per 34 Code of Federal Regulations ("CFR") 690.62 Calculation of a Federal Pell Grant, the amount of a student's Pell Grant for an academic year is based upon the payment and disbursement schedules published by the Secretary for each award year. The Uniform Guidance Compliance Supplement states that the Department of Education provides institutions Payment Disbursement Schedules for determining Pell awards each year. The Payment or Disbursement Schedule provides the maximum annual amount a student would receive for a full academic year for a given enrollment status, Expected Family Contribution ("EFC") and Cost of Attendance ("COA"). The Payment Schedule is used to determine the annual award for full-time, three-quarter time, half-time and less-than-half-time students. Condition: The College's internal controls surrounding the awarding and disbursement of Pell Grants to students were not adequate to maintain compliance with Title IV regulations. Repeat Finding from Prior Year: No. Questioned Cost: None. Context: Out of the 40 students tested, one student was not properly awarded or disbursed Pell Grant aid based on the classes in which they began attendance. The student should have received $3,447 for fall and spring, respectively; however, only received $2,585 each semester causing a total underpayment of $1,724. Effect: Cleveland Institute of Art did not meet the requirement of ensuring that proper Pell Grant amounts are awarded and disbursed to students. Cause: The underpayment indentified is due to the Powerfaids and SIS program integration that caused the student's actual credit hours to not correctly update into the Powerfaids system. Recommendation: A system of internal controls surrounding the awarding of Pell Grants in the correct amount should be put in place and take place prior to the disbursement of funds to the student. Management Response: Management acknowledges that there was an error in the amount of Pell awarded to the student. Cleveland Institute of Art reviewed all Pell awards for 2022-2023 and discovered a total of five occurrences of a Pell Grant being under awarded totaling $6,588. Students impacted will be credited for any error in their initial award. The College is also reconfiguiring its systems to ensure that this error does not occur in the future.

Corrective Action Plan

Management acknowledges that there was an error in the amount of Pell awarded to the student. Cleveland Institute of Art is in the process of calculating the number of students affected by the issue and reconciling any differences. The College is also reconfiguring the systems to ensure that this issue does not continue. The financial aid office will import on a regular basis the credit hour update/create student update into Powerfaids using the data integration from J1 table to load credit hours onto the student record until the Pell recalculation/census date. The financial aid office will continue to share with the Registrar’s office the Financial Aid credit hours update report that shows hours not contributing to the program so they can correct the coding on specific coursework into the appropriate “trees.” Powerfaids only imports hours contributing to the program. At the beginning of the semester, and prior to disbursing aid, the financial aid office will look for enrollment discrepancies and reconcile hours in their system with a registration report from the Registrar’s office. On the census date, which is defined as day 15 of the term, the financial aid office will lock down the enrollment hours on the student record after reconciling the hours on the student record with the hours on the Registrar’s census report.

Categories

Student Financial Aid Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $6.00M
84.063 Federal Pell Grant Program $1.12M
84.038 Federal Perkins Loan Program $889,790
84.033 Federal Work-Study Program $150,219
84.007 Federal Supplemental Educational Opportunity Grants $99,241
84.425 Education Stabilization Fund $38,294