Finding 957420 (2023-002)

-
Requirement
C
Questioned Costs
-
Year
2023
Accepted
2024-03-18
Audit: 295700
Organization: Birmingham-Southern College (AL)
Auditor: Bdo USA PC

AI Summary

  • Core Issue: The College held federal funds longer than allowed, violating cash management rules.
  • Impacted Requirements: Funds must be disbursed within 3 business days; excess cash must be returned promptly to the U.S. Department of Education.
  • Recommended Follow-Up: Enhance procedures to ensure timely return of excess cash and implement new reporting to track federal student aid disbursements.

Finding Text

Federal Program Information: Federal Supplemental Educational Opportunity Grants (ALN 84.007), Federal Direct Student Loans (ALN 84.268) Criteria or Specific Requirement: Cash Management - Institutions are permitted to draw down Title IV funds prior to disbursing funds to eligible students and parents. The institution’s request must not exceed the amount immediately needed to disburse funds to students or parents. A disbursement of funds occurs on the date an institution credits a student’s account or pays a student or parent directly with either student financial aid funds or institutional funds. The institution must make the disbursements as soon as administratively feasible, but no later than 3 business days following the receipt of funds. Any amounts not disbursed by the end of the third business day are considered to be excess cash and generally are required to be promptly returned to the U.S. Department of Education (the “ED”) (34 CFR section 668.166(a)(1)). Excess cash includes any funds received from the ED that are deposited or transferred to the institution’s Federal account as a result of an award adjustment, cancellation, or recovery. However, an excess cash balance tolerance is allowed if that balance: (1) is less than one percent of its prior-year drawdowns; and (2) is eliminated within the next 7 calendar days (34 CFR sections 668.166(a) and (b)). Condition: Instances were identified where funds drawn were held in excess of the allowable time frame. Cause: Administrative oversight. Effect or Potential Effect: The College was not in compliance with Cash Management requirements. Questioned Costs: None. Context: During our audit procedures, we noted the following: • 1 instance of cash held in excess of the allowable time frame for the Federal Supplemental Educational Opportunity Grant Program. • 1 instance of cash held in excess of the allowable time frame for the Federal Direct Student Loan Program. Identification as a Repeat Finding: There was no similar finding identified in the prior year. Recommendation: We recommend the College enhance its procedures to ensure that excess cash is returned timely. Views of Responsible Officials: The College acknowledges the findings. Corrective action has occurred. The Financial Aid Office has updated policies and procedures to include a new report of all federal student aid to be sent to the Finance Office after any disbursements or adjustments of student aid. This report will include Direct Loans, Pell and SEOG.

Categories

Cash Management Student Financial Aid

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $4.79M
84.063 Federal Pell Grant Program $1.21M
84.116 Fund for the Improvement of Postsecondary Education $151,197
84.033 Federal Work-Study Program $151,000
84.007 Federal Supplemental Educational Opportunity Grants $104,000
47.074 Biological Sciences $11,386
84.038 Federal Perkins Loan Program $0