Academy of Interactive Entertainment

FINDING 2022-001 Federal Grantor/Program or Cluster Title Student Financial Assistance Cluster Department of Education Programs Federal CFDA Number 84.007, 84.063, 84.268 Criteria - Institutions must calculate Return of Title IV Funds (R2T4) refunds in accordance with federal regulations. These regulations state that when a student withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV funds that the student earned as of the student's withdrawal date. The amount earned is based on a pro-rata calculation using the number of days/hours attended and the number of days/hours in the payment period or period of enrollment (34 C.F.R. 668.22). Condition - R2T4 refund calculations were not properly computed when two students withdrew from the Organization. Cause- In these cases, it appears that the Organization's R2T4 refund calculation procedures were not properly followed. Effect - The Organization incorrectly computed an R2T4 refund calculations for two of the 14 withdrawal student files tested for R2T 4 compliance. We tested all withdrawal students in the population. In these instances, the Organization used an incorrect number of days or hours in the R2T4 refund calculations. The incorrectly computed R2T4 refund calculations were as follows: Student A30 B7 Type Refund Refund Program Pell Pell Amount Returned $ 430 $2,243 Amount Disbursed NIA NIA Correct Amount $ 357 $2,218 Over Amount $ 73 $25 Nature, Extent of Issue, and Questioned Costs - The result of the incorrect R2T4 calculations identified above was an over refund of Federal Pell Grant funds to ED. As a result, there are no questioned costs associated with this finding. The overall error rate associated with this fmding is 14.3% (2114). This finding has been identified as a significant deficiency in the Independent Auditors' Report on Compliance. Recommendations -The Organization should take steps to ensure that its R2T4 refund calculation procedures are strictly followed. Views of Responsible Officials - The Organization concurs with this finding and has procedures in place as outlined in the Corrective Action Plan to ensure compliance with requirements.

Finding No. 2022-001, page 43: Incorrectly computed an R2T4 refund calculations for two of 14 withdrawn students. Institution?s comments and Corrective Actions: AIE financial aid servicer Campus Ivy calculated the R2T4 refunds differently than the auditor expected. From Campus Ivy: Our R2T4 process is to determine payment 2 beginning the next scheduled class day when hours were met in the middle of the day using the theory, we are unable to truly determine if those hours were academically (successfully) completed for PP1 or PP2. Campus Ivy did adjust the refund calculations based on the auditors? expectations. Additionally, the auditor noted, ?This situation is a little tricky and it doesn't help that the Department is not explicit in their guidance on how it should be handled when the payment period for a clock hour program begins and ends on the same day. But after considering your response, I agree that would probably be the best way to handle to the situation.?

Federal Grantor/Program or Cluster Title Student Financial Assistance Cluster Department of Education Programs Federal CFDA Number 84.007, 84.063, 84.268 Criteria - Institutions are required to report changes in a student's enrollment status, the effective date of the status, and an anticipated completion date to the National Student Loan Data System (NSLDS) (34 C.F.R. ? 685.309(b)). Condition - The Organization reported incorrect student status dates to NSLDS for several students. Cause - In these cases, it appears that the Organization's procedures for submitting accurate information to NSLDS were not properly followed. Effect - Student status information reported to NSLDS was compared to information from the students' files for students who graduated, withdrew, dropped out, or enrolled but never began attendance from our file testing sample. For 15 of the 28 students tested, the following discrepancies were noted: Student A20 A21 A22 A24 A25 A28 A29 A30 A35 A36 B2 B3 B4 B5 B6 Status per NSLDS Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 08/16/21 Full Time - 08/12/20 Full Time - 08/12/20 Full Time - 10/04/21 Full Time - 08/16/21 Full Time - 10/13/21 Full Time - 08/12/20 Full Time - 08/16/21 Status per Support Graduated - 07 /20/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Withdrawn - 05/04/22 Graduated - 07 /20/22 Graduated - 07 /20/22 Withdrawn - 09/29/21 Withdrawn - 01/11/22 Withdrawn - 03/09/22 Withdrawn - 1 1/10/21 Withdrawn - 12/01/21 Nature, Extent of Issue, and Questioned Costs - There are no issues or questioned costs associated with this finding. The overall error rate associated with this finding is 53.6% (15/28). This finding has been identified as a significant deficiency in the Independent Auditors' Report on Internal Control over Compliance. Recommendations - The Organization should correct the status dates in NSLDS for the students noted above. In addition, the Organization should take steps to ensure that its procedures to accurately submit information to NSLDS are strictly followed. Views of Responsible Officials - The Organization concurs with this finding and has procedures in place as outlined in the Corrective Action Plan to ensure compliance with requirements.

Finding No. 2022-002, page 44: The Organization reported incorrect student status dates to NSLDS for several students. Institution?s comments and Corrective Actions: When contracting with the new financial aid servicer, Campus Ivy, in 2021, AIE did not include updating NSLDS as part of the contract. The contract was amended on October 26, 2022. Included in this contract adjustment, all NSLDS statuses were adjusted for the audit period.

Federal Grantor/Program or Cluster Title Federal CFDA Number COVID-19 Education Stabilization Fund 84.425 Criteria -The U.S. Department of Education Office of Inspector General requires that institutions that receive Higher Education Emergency Relief Fund (HEERF) Grants through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) follow the procurement standards set out at 2 C.F.R. ? 200.318 through 200.326. Institutions must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 C.F.R. part 200. Condition - The Organization could not provide support that the required procurement standards set out at 2 C.F.R. ? 200.318 through 200.326 were followed for expenditures classified as small purchases. Cause - It appears the Organization was unaware of the procurement requirements and did not establish the required policies and procedures related to procurements under Federal awards. Effect - Two out of the five procurement transactions selected for testing were identified as small purchases. For each of the two transactions, the Organization was unable to provide support that the required procurement standards were followed. Questioned Costs - There are no questioned costs associated with this finding as the small purchase transactions were for allowable costs. However, due to the high error rate associated with this finding, 100% (2/2 small purchase transactions), this finding has been identified as a significant deficiency in the Independent Auditors' Report on Compliance. Recommendation - The Organization should develop written procurement policies and procedures that conform to applicable Federal statutes and the procurement requirements identified in 2 C.F.R. part 200. Views of Responsible Officials - The Organization concurs with this finding and has procedures in place as outlined in the Corrective Action Plan to ensure compliance with requirements.

Finding No. 2022-003, page 46: The Organization could not provide support that the required procurement standards set out at 2 C.F.R. ? 200.318 through 200.326 were followed for expenditures classified as small purchases. Institution?s comments and Corrective Actions: AIE will develop the required HEERF P&P by taking the following actions in the next 60 days and due date of 1/31/2023. ? HEERF P&P to be updated to include elements of how we apply institutional funding ? Creation of Grants P&P

FINDING 2020-001 "See Schedule of Findings and Questioned Costs for chart/table" Criteria - Organizations must require each applicant whose application is selected by the U.S. Department of Education to verify the information required for the Verification Tracking Group to which the applicant is assigned. (34 CFR 668.51 through 668.61) Condition - Verification procedures were not properly completed for 11 students. Cause-In these cases, it appears that the Organization's verification procedures were not properly followed. Effect - Verification procedures were not properly completed for 11 of 26 student files in our sample that required verification of ISIR information. The verification discrepancies were as follows: "See Schedule of Findings and Questioned Costs for chart/table" FINDING 2020-001, Continued Effect, continued- The overall error rate for this finding is 42.3% (11/26). Due to the high error rate associated with this finding, we consider it to be a material weakness in internal control over compliance and a material instance of non-compliance related to the Special Tests and Provisions compliance requirement. We have qualified the opinion in the Independent Auditors' Report on Compliance to reflect this. Questioned Costs - As a result of this finding, the Organization subsequently re-ran the need analyses for the students noted above using the accurate data. The resulting changes in the students' awards that have been identified as questioned costs are as follows: "See Schedule of Findings and Questioned Costs for chart/table" Recommendation -The Organization should make the necessary return of question costs to the U.S. . . Department of Education. In addition, the Organization should take steps to ensure that its verification procedures are strictly followed. Views of Responsible Officials - The Organization concurs with this finding and has procedures in place as outlined in the Corrective Action Plan to ensure compliance with requirements. 41

CORRECTIVE ACTION PLAN CONSOLIDATED FINANCIAL STATEMENTS AND SINGLE AUDIT COMPLIANCE REPORTS FOR THE YEAR ENDED JUNE 30, 2020 EIN: 27-3792158 and 27-2990527 OPE ID: 04223600 and 04248400 DUNS #: 078448006 and 036677553 Audit Firm: Weworski & Associates Audit Period: July 1, 2019 to June 30, 2020 Finding No. 2020-001, page 40: Verification procedures were not properly completed for 11 students. Institution?s Comments and Corrective Actions: Academy of Interactive Entertainment (AIE) concurs with the findings and recommendations provided by the audit firm. AIE recognizes the deficiency in its internal controls over financial aid procedures and seeks to improve its oversight of these activities. Criteria: Organizations must require each applicant whose application is selected by the U.S. Department of Education to verify the information required for the Verification Tracking Group to which the applicant is assigned. Corrective action: AIE has implemented a two-signature requirement to validate verification forms. The 1st signature is of the person who is performing the verification and the 2nd is of a person assigned as an internal auditor and/or supervisory position. The 2nd signatory will confirm that all discrepancies between the ISIR and Supporting Documentation have been reconciled. Any unresolved issues will be returned to the 1st for correction prior to final approval. Comments on Prior Year Findings AIE had no prior year findings reported for the year ending June 30, 2019.

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