Finding Text
Federal Program Information:
Federal Direct Loan Program (ALN: 84.268)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): C. 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: During our cash management testing, we noted multiple instances during the fiscal year where funds drawn were held in excess of the allowable time frame and/or allowable thresholds.
Cause: Administrative oversight with respect to cash management compliance requirements.
Effect or Potential Effect: The University is not properly following policies and procedures in place to ensure that compliance is maintained with cash management requirements and the timely return of funds.
Questioned Costs: None.
Context: We examined all draws of Federal Direct Loan Program funds and identified multiple instances of cash held in excess of the allowable time frame and/or allowable thresholds as noted in the condition.
Identification as a Repeat Finding: No similar finding was identified during the prior year.
Recommendation: We recommend that the University enhance its policies and procedures to ensure that excess cash balances are eliminated timely.
Views of Responsible Officials
and Planned Corrective Actions: The University concurs with the finding. The University will make disbursements as soon as they are available, but no later than the three (3) business days following receipt of funds. University policies and procedures will be followed closely to ensure there is no excess cash. All funds will be returned in a timely manner.