Finding Text
Finding 2023-003 - Significant Deficiency, Compliance
Federal Award No. 84.007, 84.033, 84.038, 84.063, 84.268, 84.379
U.S. Department Of Education
Student Financial Aid Cluster – Special Tests and Provisions
Criteria: In accordance with Federal Regulations 34 CFR 668.171, an institution administering Federal Student Financial Aid must obtain a minimum composite score of 1.5 to fulfill the requirements of financial responsibility and be above 1.0 to be considered for “Zone Alternative” treatment.
Condition: For the year under audit, the College’s financial responsibility composite score will fail to meet the numeric standard of responsibility as set by the Department of Education (ED). However, when an institution cannot meet the criteria for financial responsibility through the composite score, ED provides other ways to comply with this standard. One way the College can comply with this standard is by obtaining an irrevocable letter of credit from a bank. In addition, the College must make Federal Student Financial Aid disbursements under the heightened cash monitoring method described in 34 CFR 668.162.
Context: The College’s ED financial responsibility composite was between 1.0 and 1.5 in the past three fiscal years. The College has not been able to bring its score above 1.5, therefore will continue to have to obtain a letter of credit and follow heightened cash monitoring procedures.
Effect: The College will have to obtain a letter of credit and follow heightened cash monitoring procedures. Additionally, the College may be required to provide further documentation of its financial plans and progress to accreditation agencies in which it may seek accreditation through.
Questioned Costs: None noted.
Cause: Bethany College does not have proper processes and related controls in place to ensure that the required financial responsibility composite score does not fall below 1.5.
Indication Of Repeat Finding: This is a repeat of a finding in the immediately prior year; see Summary Schedule of Prior Audit Findings 2022-001.
Recommendation: We recommend that the College implement controls and processes for monitoring budgets that include all expenses including non-cash transactions in order to adequately anticipate the revenue needed to cover the expenses of the College. We recommend that the College evaluate all of its cost centers and revenue streams to ensure that the College is maximizing fiscal efficiency while still achieving the mission of the College.
Views Of Responsible Officials (Unaudited): The College has obtained the required letter of credit from a local bank and will comply with federal heightened cash monitoring requirements. The College continues to work to positively align revenues and expenses. The College regularly monitors its cash flows and expense budgets both for timing and savings. Efforts continue to increase net student revenues to reduce the need for current-year contributions and other income for operating expenses. The College will continue to carefully plan and manage institutional financial aid to yield stronger net student revenues to support operations.
Anticipated Completion Date: August 2024
Contact Person: Steven W. Eckman, President