Finding Text
2023-011: Special Tests and Provisions: Third Party Servicers
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: Per FSA handbook, when a school uses a third party servicer under a Tier One Agreement with processing direct payments of Title IV funds on behalf of the school, then a school must conduct reasonable due diligence reviews every two years to ascertain whether the fees imposed under the T1 arrangement are, considered as a whole, consistent with or below prevailing market rates.
Per Uniform Guidance 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 meet the minimum requirements when in a Tier One Agreement with a third party servicer to perform one or more of the functions associated with processing direct payments of Title IV funds on behalf of the University.
Questioned costs: None.
Context: During our testing of the third party agreement with Bank Mobile, we identified that the University did not conduct a due diligence review in the 2 year required timeframe.
Cause: Due to staff turnover, compliance requirements were not timely monitored.
Effect: The University was not in compliance with the using a servicer to deliver Title IV credit balances standards.
Repeat finding: No.
Recommendation: We recommend the University review current processes to ensure all compliance requirements are being met when using a third party servicer to deliver Title IV credit balances.
Views of responsible officials: There is no disagreement with the audit finding.