Finding Text
2023-006: Reporting: Direct Loan Reconciliations
Federal agency: U.S. Department of Education
Federal program title: Student Financial Assistance
ALN Number: 84.007, 84.033, 84.063, 84.268, 84.379
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: July 1, 2022 through June 30, 2023
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
• Other Matters
Criteria or specific requirement: The Code of Federal Regulations (34 CFR 685.300(b)(5)) and the Federal Student Aid Handbook, Volume 4, Chapter 6, states loan reconciliation is a mandatory monthly process requiring the comparison of both internal and external records to be completed by a University participating in the Direct Loan Program. Reconciliation is conducted to identify and resolve differences between net draws and disbursements reported to the Common Origination and Disbursement for a specific award year. A University must document the reasons and resolve the discrepancies identified during the reconciliation process and that a review had been performed.
Criteria or specific requirement (continued): Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements.
Condition: The University did not maintain documentation that monthly direct loan reconciliations were performed or reviewed.
Questioned costs: None.
Context: The University’s student financial aid department did not maintain documentation that monthly direct loan reconciliations were performed or reviewed.
Cause: Due to staff turnover, direct loan reconciliations were not maintained.
Effect: The lack of documented review of the direct loan reconciliations being performed by student financial aid department could result in errors in the reconciliation going undetected by student financial aid management.
Repeat finding: No.
Recommendation: We recommend the University implement a formal review procedure to document that the direct loan reconciliations are performed on a timely basis each month.
Views of responsible officials: There is no disagreement with the audit finding.