DePaul University

Finding 2025-001 Inaccurate NSLDS Reporting Federal Agency: U.S. Department of Education (USDE) Program Name: Student Financial Assistance Cluster ALN and Program Expenditures: 84.063 ($32,562,241) 84.268 ($174,471,585) Federal Award Numbers: P063P240105 P268K250105 P063P230105 Federal Award Year: July 1, 2024 to June 30, 2025 Questioned Costs: None Compliance Requirement: NSLDS Reporting Condition Found: The University did not accurately report student enrollment status changes to the National Student Loan Data System (NSLDS). The U.S. Department of Education (USDE) uses enrollment data reported by the University to determine: (1) eligibility for interest subsidies, (2) loan repayment start dates, and (3) in-school loan deferments. The enrollment information is also used by USDE to measure program completion data to evaluate the effectiveness of financial aid programs. During our testing of 40 students (31 students with Federal Direct Loan Program disbursements of $1,002,311 and 9 students with Federal Direct Loan Program disbursements of $114,486 and Federal Pell Grant disbursements of $64,090) that had a reduction or increase in attendance levels, graduated, withdrew, dropped out, or enrolled but never attended during the fiscal year, we noted the following: • The status change for one graduated student (with Federal Direct Loan Program disbursements of $15,434) was reported incorrectly to the NSLDS as a Withdrawn (W) status rather than a Graduated (G) status. Specifically, in the 2024-2025 academic year, the student was previously reported to the NSLDS as withdrawn due to no enrollment but then subsequently graduated, and as a result the University did not update the enrollment status change to graduated. Upon further review, management identified an additional 43 students (21 students with Federal Direct Loan Program disbursements of $192,242 and 22 students with Federal Direct Loan Program disbursements of $65,398 and Federal Pell Grant disbursements of $64,907) during the fiscal year who were reported incorrectly to the NSLDS as a W status rather than a G status. We further noted management review controls implemented by the University were not designed at a level of precision to ensure University enrollment data submitted to NSLDS was accurate. The University disbursed Federal Direct loans and Pell grants to 9,674 and 5,822 students, respectively, during the year ended June 30, 2025. Criteria or Requirement: According to 34 CFR Sections 690.83(b)(2) and 685.309, under the Pell grant and Federal Direct Loan programs, institutions must complete and return the Enrollment Reporting Roster File via NSLDS within 15 days of receipt. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster File. Unless an institution expects to submit its next updated enrollment report to the USDE within the next 60 days, an institution must notify NSLDS within 30 days after the date that the institution discovers that (1) a Direct loan was made to or on behalf of a student who was enrolled or accepted for enrollment at the institution, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended; or (2) a student who is enrolled at the institution and who received a loan under Title IV has changed his or her permanent address. The November 2022 NSLDS Enrollment Reporting Guide states “for a student who has graduated, schools who initially report a withdrawn status must subsequently report the student as having graduated by certifying a ‘G’ status at the Campus-Level and/or Program-Level as appropriate.” In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include establishing procedures to ensure student enrollment status changes are accurately reported to the NSLDS. Cause: Cause: In discussing these conditions with the University, they stated that the specific issue was due to a gap in staffing and failure to understand that a secondary manual update to the record was necessary. The individual who took the previous control operator’s place did not have an effective understanding of the reporting process and did not report the student’s status appropriately. Possible Asserted Effect: Inaccurate submission of student enrollment status affects the determinations that lenders and servicers of student loans make related to in-school deferments, grace periods, and repayment schedules, as well as the Federal government’s payment of interest subsidies. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding code 2025-xxx) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University review and revise its procedures to ensure accurate reporting of enrollment status information to the NSLDS. Views of University Officials: DePaul is committed to fulfilling the federal requirement to report withdraw and graduation status to the NSLDS. The University Registrar’s Office is responsible for that task and accomplishes it by reporting enrollment through the National Student Clearinghouse (NSC), a third-party servicer. Generally, there are not typically issues with reporting students who withdraw or who graduate. However, we concur with the finding and acknowledge the specific set of circumstances that led to this issue. The number of these cases is limited. We understand the importance of accurate reporting and our internal procedures have been adjusted. We are committed to maintaining compliance with all regulatory requirements.

Finding 2020-001: Untimely Public Posting of Special Report Federal Agency: U.S. Department of Education (ED) Program Name: COVID-19 ? Higher Education Emergency Relief Fund CFDA # and Program Expenditures: 84.425E ($3,350,500) Award Numbers: P425E203013 Federal Award Year: July 1, 2019 to June 30, 2020 Questioned Costs: None Compliance Requirement: Reporting Type of Finding: Noncompliance, Significant Deficiency Condition Found: The University did not publicly post a special report on a timely basis. The University is required to prepare and publicly post a special report (Section 18004(a)(1) Student Aid Portion Quarterly Public Reporting) with certain information describing the use of funds distributed from the Higher Education Emergency Relief Fund (HEERF) on their website no later than 30 days after receiving the award. ED awarded the University the Student Aid Portion of the HEERF on April 28, 2020. The University was required to publicly post the initial report to its website by May 28, 2020, however, the University first publicly posted the initial report to its website on July 15, 2020. Criteria or Requirement: According to an electronic announcement (EA) by ED on May 6, 2020, ED required institutions that received a HEERF 18004(a)(1) Student Aid Portion award to publicly post certain information on their website no later than 30 days after award, and update that information every 45 days thereafter (by posting a new report). On August 31, 2020, ED revised the EA with 85 FR 53802, which decreased the frequency of subsequent reporting from every 45 days to every calendar quarter. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the timely posting of special reports to their website. Cause: In discussing these conditions with University management, the delay in publicly posting the special report to the University?s website was due to resource constraints as the University?s information systems personnel were implementing technology to effectively transition to distance learning and remote work in light of the COVID-19 pandemic and related shelter-in-place orders. Possible Asserted Effect: Failure to publicly post special reports to the University?s website on a timely basis does not allow the public to access timely information on how the University used the funds received from the HEERF. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University implement procedures to ensure special reports are posted to the University?s website in a timely manner. Views of University Management: We agree with the auditor's comments. These were unprecedented times, and this type of failure is inconsistent with past practice. Reporting requirements are tracked internally via the BlueSky deliverable system. Publishing access to the reporting website has been granted to the Restricted Accounting Supervisor to avoid additional publishing delays.

Finding 2020-002: Failure to Notify Subrecipients of Federal Funding Federal Agency: Department of Housing and Urban Development National Aeronautics and Space Administration National Science Foundation U.S. Department of Health and Human Services Program Name: Research and Development Cluster CFDA # and Program Expenditures: Various ($4,202,190) Award Numbers: 500999 501084 501127 501165 501225 501237 501248 501278 501311 501313 501334 501436 501455 501486 Federal Award Year: 7/1/2019 ? 6/30/2020 9/1/2019 ? 6/30/2020 (501455) 1/1/2020 ? 6/30/2020 (501486) Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Type of Finding: Noncompliance, Significant Deficiency Condition Found: The University did not communicate required federal program information to subrecipients at the time of disbursement relative to payments passed through to subrecipients of awards within the Research and Development Cluster. During our testwork over 5 subrecipients of awards within the Research and Development Cluster, we noted the University did not communicate the Catalog of Federal Domestic Assistance (CFDA) number at the time of disbursement to any of the subrecipients tested. We were informed by University personnel that the University did not provide any notification of CFDA number at time of disbursement to any of its subrecipients during fiscal year 2020. Amounts passed through to subrecipients under the Research and Development Cluster totaled $1,247,257 during the year ended June 30, 2020. Criteria or Requirement: According to 2 CFR Part 200.331(1)(xi), all pass-through entities must identify the dollar amount made available under each Federal award and the CFDA number at the time of disbursement. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure required information is communicated to subrecipients at time of disbursement. Cause: In discussing these conditions with University management, the CFDA number was not communicated to subrecipients at the time of disbursement because the CFDA number was disclosed at the time the subcontract was signed and during annual reviews. Possible Asserted Effect: Failure to communicate CFDA numbers at time of disbursement can hamper the subrecipient?s ability to correctly prepare their schedule of expenditures of federal awards. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University add to their disbursement description the CFDA number for each disbursement made to subrecipients. Views of University Management: We agree with the auditor?s comments. The CFDA information will be added to disbursement requests submitted to Accounts Payable. During subcontractor invoice review the Office of Research Services will ensure the CFDA information is listed on the request before approving, and this requirement has also been communicated to the Accounts Payable department. A letter containing the CFDA information will be remitted with all subcontract check payments. Restricted Accounting will be copied on all subcontractor EFT remittances and will provide a disbursement notification including CFDA number via e-mail to subrecipients.

Finding 2020-003: Untimely Review of Subrecipient Single Audit Reports Federal Agency: Department of Housing and Urban Development National Aeronautics and Space Administration National Science Foundation U.S. Department of Health and Human Services Program Name: Research and Development Cluster CFDA # and Program Expenditures: Various ($4,202,190) Award Numbers: 500999 501084 501127 501165 501225 501237 501248 501278 501311 501313 501334 501436 501455 501486 Federal Award Year: 7/1/2019 ? 6/30/2020 9/1/2019 ? 6/30/2020 (501455) 1/1/2020 ? 6/30/2020 (501486) Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Condition Found: The University does not have adequate controls in place to ensure single audit desk reviews are completed on a timely basis for subrecipients of the Research and Development Cluster. The University prepares monitoring checklists for each of its subrecipients and included in the checklist is a procedure to review the subrecipient?s single audit report. Subrecipients who receive more than $750,000 in federal awards are required to submit a single audit report to the University. The University is responsible for reviewing these reports and issuing management decisions on any findings applicable to University programs. During our review of a sample of four subrecipient?s monitoring checklists, we noted the University did not review the single audit reports within six months of acceptance of the single audit report by the Federal Audit Clearinghouse (FAC). For two of the subrecipients, the reviews were completed 328 to 632 days after FAC acceptance. While none of the reports that were reviewed late contained findings requiring the University to issue a management decision, the timing of the University?s review procedures would not permit compliance with the requirement to issue management decisions within six months. Amounts passed through to subrecipients under the Research and Development Cluster totaled $1,247,257 during the year ended June 30, 2020. Criteria or Requirement: According to 2 CFR 200.331(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.331(d)(3) and 2 CFR 200.521(d) state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the subrecipient?s audit report by the Federal Audit Clearinghouse and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include implementing procedures to ensure single audit reports are reviewed in a timely manner. Cause: In discussing these conditions with University management, the single audit reports were not reviewed timely due to personnel changes and insufficient follow through with existing procedures. Possible Asserted Effect: Failure to obtain and review subrecipient single audit reports in a timely manner could result in federal funds being expended for unallowable purposes and subrecipients not properly administering the federal programs in accordance with laws, regulations, and the grant agreement. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University establish procedures to ensure subrecipient single audit reports are reviewed within established deadlines. Views of University Management: We agree with the auditor?s comments. Initial review of subcontractor audit reports were completed by the Restricted Accounting Senior Accountant and communicated to the Restricted Accounting Manager. Signoffs on these management plans were not completed by the Director of Restricted Accounting, who has since left the University. The Restricted Accounting Senior Accountant will continue to request and receive audit certifications from subcontractors and complete the initial single audit review. The Restricted Accounting Supervisor will complete a secondary review and sign off on monitoring plans, as well as issue a management decision. The audit and monitoring plan reviews will be added to the University?s BlueSky deliverable tracking system to generate notifications prior to deadlines.

Finding 2020-004: Untimely Review of Cash Management Reconciliations Federal Agency: U.S. Department of Education (ED) Program Name: Student Financial Assistance Programs Cluster CFDA # and Program Expenditures: 84.268 ($211,742,522) Award Numbers: P268K180105 P268K190105 P268K200105 Federal Award Year: July 1, 2019 to June 30, 2020 Questioned Costs: None Compliance Requirement: Cash Management, Reporting Type of Finding: Significant Deficiency Condition Found: The University did not review quarterly cash management reconciliations of cash draws to actual expenditures for payments made under the Federal Direct Student Loans (DL) program in a timely manner. The University is on the advance payment method with respect to the drawdown of Title IV funds, however, it requests funds under the reimbursement payment method. The cash management process for the DL program includes making cash draws on a weekly basis based on actual payments of DL funds to eligible students and/or parents and any expected refunds. At the end of each quarter, the University reconciles the actual expenditures of the DL program to the amounts drawn. During our testwork, we noted the review of the quarterly reconciliations were not timely performed. Timing of the review of the reconciliations were as follows: See Schedule of Findings and Questioned Costs for chart/table. Criteria or Requirement: According to 34 CFR 668.162, the Secretary may provide funds to an institution under the advance payment method or the reimbursement payment method. Under the advance payment method, an institution submits a request for funds to the Secretary. The institution's request may not exceed the amount of funds the institution needs immediately for disbursements the institution has made or will make to eligible students and parents. Under the reimbursement payment method, an institution must credit a student's ledger account for the amount of Title IV funds that the student or parent is eligible to receive, and pay the amount of any credit balance due under ?668.164(h), before the institution seeks reimbursement from the Secretary for those disbursements. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure cash draw reconciliations are reviewed timely to ensure funds requested meet actual cash needs. Cause: In discussing these conditions with University management, the quarterly cash management reconciliations were not reviewed in a timely manner due to turnover in personnel and delays in accessing the system holding the reconciliations. Possible Asserted Effect: Failure to review reconciliations of cash draws in a timely manner may result in the University requesting funds in excess of actual and immediate cash needs. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the University implement procedures to ensure quarterly cash draw reconciliations are reviewed in a timely manner, including establishing a period of time following quarter end to complete the review within. Views of University Management: We agree with the auditor?s comments. As of March 2021, the Direct Loan Draws are completed by the Restricted Accounting Supervisor on a weekly basis and reviewed by the Controller within 30 days subsequent to quarter end.

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