Le Moyne College

Findings and Questioned Costs Relating to Federal Awards Federal Agency: United States Department of Education Federal Program: Student Financial Assistance Cluster Federal Direct Student Loans (84.268) Federal Award Numbers: P268K211858 Federal Award Years: 2021 Compliance Requirement: Special Tests and Provisions ? Disbursement Notifications Reference: 2021-001 Criteria Title 34 U.S. Code of Federal Regulations Part 668 (34 CFR 668), Student Assistance General Provisions, section 668.165(2) states except in the case of a post-withdrawal disbursement made in accordance with ?668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal Perkins Loan, or TEACH Grant program funds, the institution must notify the student or parent of: i. The anticipated date and amount of the disbursement; ii. The student's or parent's right to cancel all or a portion of that loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds or TEACH Grant proceeds returned to the Secretary; and iii. The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement. Further, 2 CFR 200.303(a) states the nonfederal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During the year ended May 31, 2021, for 33 of the 40 students selected for Federal Direct Loan disbursements testing, the College did not send notification of the disbursement to the student accounts for the Fall 2020 semester. Additionally, the Campus did not maintain a system of internal control to ensure proper notification was made in a timely manner in accordance with 34 CFR 668.Cause The condition found is due to the fact that at the beginning of a new award year, the disbursement notification code within Datatel is required to be manually updated to change the financial aid table name to the new award year. Subsequent to the 2020 award year the disbursement notification code was not updated for the 2021 award year. As such there were no disbursement notification emails being generated and sent to students for the 2021 award year disbursement activity for the period June 1, 2020 through October 30, 2020. In addition, while the College did have an internal control in place to ensure proper disbursement notifications were made in accordance with the Department of Education?s requirements 34 CRF 668, it was not operating effectively during the period under audit. Possible Asserted Effect Failure to properly notify students of disbursements could result in further noncompliance with Federal statutes, regulations, and the terms and conditions of the federal award.

Auditee Corrective Action Plan: Le Moyne has an affirmative confirmation process which requires notification within 30 days of a federal loan disbursement. The College has an automated process that emails notification to the students which contains: 1) the date and amount of the disbursement; 2) student or parent?s right to cancel all or a portion of the loan disbursed, through having the loan proceeds returned to the holder of the loan; and 3) the procedure and time by which the student or parent must notify the institution that they wish to cancel the loan. The automated process runs on criteria that is manually updated before the start of each aid award year. In June 2020, the control operator did not adjust the process criteria and the control reviewer did not identify and resolve the operational failure until October 30, 2020, after the Fall 2020 awards should have been sent (September 30, 2020). The College did have a mitigating control in place, where in addition to the automated notification, a manual email was sent to each student when their disbursement was applied to their account, which included the student?s right to cancel through Financial Aid within a certain timeline and a link to the award details and amounts posted on the students account. This mitigating control was provided within the 30-day requirement and students did reject loans during the June 1, 2020 to October 30, 2020 timeframe. Additionally, a second monitoring control was implemented, performed by an independent party from the financial aid process, in order to eliminate future operational control failures of the automated process.

Findings and Questioned Costs Relating to Federal Awards Number: 2019-001 Federal Agency: United States Department of Education Programs: Federal Direct Student Loans (84.268) Award Numbers: P268K18158 Award Year: 2018-2019 Finding: Special Tests ? Disbursements to or on Behalf of Students Criteria Under the Direct Loan program, the institution must notify the student, or parent in writing of (1) the date and amount of the disbursement, and (2) the student?s right, or parent?s right to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. Condition Notifications are sent to students in the form of an email. We performed testing of the distribution notification process at Le Moyne College during the 2019 audit and noted the following exception: The distribution notification email sent (1) notified the students that there was activity on the account; and (2) provided a link to their student account to view the activity. The distribution notification sent to students did not contain the required level of detail and related information. The notifications did not explicitly state (1) the date and amount of the disbursement, and (2) the student?s right, or parent?s right to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. This was identified as an exception during the prior year audit. Subsequent to the issuance of the final audit report, on February 28, 2019, management implemented new procedures to ensure all students received appropriate distribution notifications. As evidenced in our sample, all students with distributions subsequent to February, 28, 2019 received appropriate distribution notifications. As the prior year finding was still evident for 37 out of 40 distribution notices selected as samples, this is considered a finding in the current year. The updated distribution notifications were sent for 3 out of 40 samples. These 3 were the only samples selected where the distribution date occurred after February 28, 2019. Cause Remediation that occurred as a result of the prior year finding was performed for disbursements subsequent to February 28, 2019 and a majority of the 2018-2019 distributions occurred prior to this date. Therefore, the prior year finding still impacted the current year transactions. Possible Asserted Effect Failure to provide proper notification of the disbursement, and associated rights and procedures, may result in noncompliance with federal laws and regulations, and could result in disputed status or associated distributed amounts as a result. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs None identified. Recommendation Le Moyne College asserted that distribution notifications meeting Federal requirements were sent to all students with distributions subsequent to February 28, 2019, and has continued from that date forward. No further corrective action is required.

Views of Responsible Officials The College immediately corrected when it was made aware that notifying students and parents through a secure website was not meeting the minimum requirements for Federal loan disbursement notifications as the data was not available in a singular format. The College implemented loan distribution notifications in a singular format on February 26, 2019 and has remained in compliance since this date.

2018-001

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