Finding 947655 (2023-005)

Criteria: Title IV regulations note that Direct Loan reconciliation is a mandatory monthly process, as required under 34 CFR 685.300(b)(5). The U.S. Department of Education released an electronic announcement December 18, 2020 reminding institutions of this requirement. Each month, Common Origination and Disbursement (COD) provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the institution) Loan Detail records. The institution is required to reconcile these files to the institution's financial records. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. Since up to three Direct Loan program years may be open at any given time, institutions may receive three SAS data files each month. The sample was not a statistically valid sample but was determined using Chapter 21 - Audit Sampling Considerations of Uniform Guidance Compliance Audits of the Government Auditing Standards and the Single Audits Audit and Accounting Guide. Condition: Management notes that reconciliations are performed timely, but there is no review of the reconciliations by someone other than the preparer. Of the three reconciliations that were tested, all appeared to be reconciled before the month was over. Cause: Management did not have the reconciliations formally reviewed. Effect: Without proper reviews performed, there is a greater risk that the information in the College's system or data reported to COD may be incorrect and would not be corrected timely. Questioned Costs: N/A Recommendation: It is recommended that the College review staffing and policies and procedures to ensure that the monthly Direct Loan reconciliation is completed and reviewed in a timely manner to facilitate compliance with Title IV regulations. Management's Response: Management acknowledges this finding. Due to insufficient staffing, review of reconciliations was inconsistent. New permanent staff have been hired in all critical business office roles so that reconciliations are now regularly reviewed by a second staff member