Finding Text
Program Information: Student Financial Assistance Cluster (ALN: Various)
Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): N. Special Tests and Provisions – Verification - An institution shall require an applicant selected for verification to submit acceptable documentation that will verify or update the following information used to determine the applicant's expected family contribution (“EFC”): adjusted gross income, U.S. income tax paid, aggregate number of family members in the household, number of family members in the household who are enrolled in as at least half-time students in postsecondary educational institutions if that number is greater than one and untaxed income subject to U.S. income tax reporting requirements in the base year which is included on the tax return form, excluding information contained on schedules appended to such forms. Untaxed income and benefits include: Social Security benefits if the institution has reason to believe that those benefits were received and were not reported or were not correctly reported; child support if the institution has reason to believe child support was received; U.S. income tax deductions for a payment made to an individual retirement account or Keough account; interest on tax-free bond; foreign income excluded from U.S. income taxation if the institution has reason to believe that foreign income was received; and all other untaxed income subject to U.S. income tax reporting requirements in the base year included on the tax return form, excluding information contained on schedules appended to such forms. (34 CFR section 668.56).
For students whose applications were selected for verification, if the institution has reason to believe that information included in the application is inaccurate, the institution may not (1) disburse any Pell or campus-based aid, (2) employ the applicant in its FWS program, or (3) originate Federal Direct Student Loans (“Direct Loans”) (or process proceeds of previously originated loans) until the applicant verifies or corrects the information. If the institution does not have any reason to believe that the information is inaccurate, the institution may withhold payment of Pell or Campus-based aid, or may make one interim disbursement of Pell or Campus-based aid, employ or allow an employer to employ an eligible student under FWS for the first 60 consecutive days after the student’s enrollment and may originate the Direct Loan, but cannot process the proceeds. If the verification process is not complete within the time period specified, the institution shall return loan proceeds. In addition, the institution is liable for an interim disbursement if verification shows that a student received an overpayment or if the student fails to complete verification (34 CFR sections 668.58, 668.60(b)(3), and 668.61)).
Condition: For certain students selected for verification testing, federal awards were disbursed prior to the completion of the required verification procedures. In addition, instances in which verification status was not correctly coded in the COD system were identified.
Cause: Administrative oversight.
Effect or Potential Effect: Federal awards were not disbursed in accordance with federal regulations and the University was not in compliance with verification compliance requirements.
Questioned Costs: Indeterminable.
Context: We noted the following exceptions:
• For 6 of 60 students tested, the University disbursed federal awards prior to completing appropriate verification procedures.
• For 2 of 60 students tested, the University did not correctly code the student’s verification status in the COD system.
Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2020-009 in the prior year schedule of findings and questioned costs.
Recommendation: We recommend that the University enhance its procedures to ensure that the required verification procedures are completed prior to disbursement of federal awards.
Views of Responsible Officials and Planned Corrective Actions: The University contracted with Inceptia on 2/5/2020, and Inceptia started completing verification for SAU on 2/18/2020. Inceptia' s Verification Gateway platform provides an automated solution to gather information and documentation required for Financial Aid Verification. Inceptia uses innovative technology to apply progressive rules for automatically or manually approving verification. Furthermore, it provides efficient and effective processes to help institutions remain compliant by organizing documents, streamlining award packaging, and allowing staff to manage the verification process. It provides the institution with the internal controls it needs over its Title IV funding. The Financial Aid Staff also can manually verify students if needed.
With Colleague and Inceptia, SAU now has a more unified operating system for systematic processes. If a student has been flagged for verification, Colleague will not allow staff to award the student financial aid. One of the award eligibility rules is "Verification Complete." If students fail to pass this rule, they will not be awarded financial aid. Colleague gives the Financial Aid Staff greater control over the disbursal of Title IV funds and prevents the FAO from disbursing aid to students who are ineligible to receive it.