NEW YORK THEOLOGICAL SEMINARY AND AFFILITATENon-Profit

Noncompliance with the Student Financial Assistance Cluster Finding # 2021-001 Student Financial Assistance Cluster: Federal Direct Student Loans (AL No. 84.268) Criteria: The Seminary is under the Heightened Cash Monitoring 1 (HCM1) payment method. Under the HCM1 payment method the institution must credit a student?s ledger account for the amount of Title IV program funds that the student or parent is eligible to receive and pay the amount of any credit balance due before the institution submits a request for funds from the Department of Education (DOE). A school may pay a student by issuing a check and a school is considered to have issued the check on the date it (1) mails the check to the student or (2) notifies the student that the check is available for immediate pickup and provides the specific location. Condition: During the fiscal year ended 2021, the Seminary was requesting funds from the DOE before paying the amount of any credit balance due to the student. Auditor noted 14 out of 20 students selected for testing were not paid before the Seminary requested funds from the DOE. Auditor further noted that notifications to students did not include the specific location where the student could obtain their check. Questioned Costs: None Cause: Seminary staff do not believe they are required to pay the student before drawing down funds as required by the HCM1 payment method. Effect: The Seminary is not in compliance with the HCM1 payment method requirements. Recommendation: We recommend that the Seminary update their procedures related to the draw down of funds. We recommend that the Seminary notify the student that the check is available for immediate pick up and specify the location where the student may pick up the check before drawing down funds from the DOE. Views of Responsible Officials: The Seminary is not in agreement as management believes they have complied with the requirements.

Finding # 2021-002 Student Financial Assistance Cluster: Federal Direct Student Loans (AL No. 84.268) Criteria: HCM1 requires that after a school makes disbursements to eligible students from institutional funds and submits disbursement records to the Common Origination and Disbursement System, it draws down FSA funds to cover those disbursements in the same way as a school on the Advance Payment Method. DOE considers a school on HCM1 to have made a disbursement when it satisfies the conditions and deadlines explained under defining the date of disbursement noted in the manual. If a disbursement creates a Title IV credit balance, the school must pay the balance directly to the student or parent before it requests funds through G5 or the Department as appropriate. Condition: Auditor noted that the sample tested indicated that there was a student who requested to have their Title IV credit balance be left on their account. This is not in compliance with the requirements under HCM1. Questioned Costs: None Cause: The Seminary would normally be allowed to have Title IV credit balances remain on the student?s account upon their request. The Seminary did receive the student?s approval; however, since the Seminary is under HCM1, they would be required to disburse the Title IV credit balances to the student to be in compliance. Effect: The Seminary failed to meet the requirements stated under HCM1. Recommendation: We recommend that the Seminary should disburse all Title IV credit balances to the student prior to the G5 drawdown date. Views of Responsible Officials: The Seminary is in agreement with the finding and will conduct regular FSA assessments to ensure consistent treatment of title IV notices and authorizations as established in CFR 668.165.

Finding # 2021-003 Higher Education Emergency Relief Fund COVID-19 HEERF Student Aid Portion (AL No. 84.425E) Criteria: These funds must be paid to students for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student?s cost of attendance, such as food, housing, course materials, technology, health care, and childcare). Condition: The Seminary disbursed emergency financial aid to two students for expenses that were unallowable. Questioned Costs: One student was awarded $1,000 in emergency financial aid when the reviewer only noted that $482 of the expense was allowable. The $482 was for rent and since the Seminary doesn?t provide housing, it isn?t an eligible expense as there was no disruption of campus operations. One student was awarded $1,500 for tuition which is not listed as an allowable expense in the guidance above. Cause: The Seminary did not examine the eligible expenses noted in the HEERF Compliance Supplement. Effect: Students received emergency financial aid for expenses that were not eligible. Recommendation: The Seminary should make sure that the expenses noted in the student?s application for emergency financial aid are eligible under HEERF guidance. Views of Responsible Officials: The Seminary is not in agreement as they believe the amounts provided to the student directly were used for allowable expenses.

Material Noncompliance with Higher Education Emergency Relief Fund Finding # 2021-004 Higher Education Emergency Relief Fund COVID-19 HEERF Institutional Aid Portion (AL No. 84.425F) Criteria: HEERF institutional funds are to be used to defray expenses associated with coronavirus. The HEERF FAQs document states that institutions may use funds to pay for certain payroll costs, including employee benefits, if such costs are newly associated with coronavirus, for staff who were unable to work during a period of any full or partial campus closures due to the pandemic (e.g., cafeteria workers, maintenance staff, bookstore clerks, etc.), or for new staff, or repurposed staff, if such staff?s work is associated with coronavirus. The HEERF Compliance Supplement further states that grant funds may not be used for senior administrator or executive salaries, benefits, or bonuses. Condition: The Seminary utilized HEERF funds for general payroll costs that were not newly associated with coronavirus, for staff who were unable to work, or for new staff, or repurposed staff as provided by the guidance. As the payroll costs charged to the grant are not newly associated with coronavirus, such costs are not allowable expenses. Questioned Costs: Questioned costs amounted to $134,692, or 100% of the population, of institutional funds spent towards unallowable employee salaries. Cause: The Seminary did not examine the eligible expenses noted in the HEERF guidance and properly apply the guidance to complying with the federal award compliance requirements. Effect: Unallowable payroll costs were charged to the HEERF award. Recommendation: The Seminary should review all grant guidance to ensure costs are allowable costs under applicable grant guidance. Views of Responsible Officials: The Seminary is not in agreement as they believe payroll costs are allowable expenses.

Material Weakness in Internal Control over Compliance Finding # 2021-005 Higher Education Emergency Relief Fund COVID-19 HEERF Institutional Aid Portion (AL No. 84.425F) As discussed at Finding 2021-004, the Seminary did not have procedures in place to identify all compliance requirements of the HEERF award. As a result of this material weakness in internal control over compliance, the Seminary is not in compliance with the HEERF award. Views of Responsible Officials: The Seminary is not in agreement as they believe payroll costs are allowable expenses.

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