MORRISON INSTITUTE OF TECHNOLOGY

Criteria - Non-federal entities are prohibited from contracting with parties that are suspended or debarred. Non-federal entities must have internal controls in place to verify that contractors are not suspended or debarred or otherwise excluded from participating in the transaction before entering into agreements or awarding contracts. Per CFR section 180.300, this verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the contractor, or (3) adding a clause or condition to the covered transaction with the contractor. Condition - The Institute did not have proper internal controls in place to verify that contractors are not suspended or debarred prior to entering into contracts. The Institute entered into a contract for construction activities totaling $499,814 and did not verify that the contractor was not suspended or debarred prior to entering into the contract. Subsequent to auditor inquiry, the Institute performed a search for the contractor on the SAM exclusion list and noted the contractor was not listed as suspended or debarred. Effect - In addition to not complying with grant requirements, failing to verify suspension and debarment status puts the Institute at risk of doing business with unreputable contractors. Cause - The Institute lacked established internal controls and procedures to ensure timely and documented verification of suspension and debarment status for contractors. Recommendation - We recommend the Institute develop and implement a documented process for verifying the suspension and debarment status of all contractors before entering into agreements. Response - Morrison Institute of Technology understands the finding and the importance of verifying the suspension and debarment status of all contractors. Verifications will be performed timely in the future. Conclusion - Response accepted.

Criteria - An institution must keep their Eligibility and Certification Approval Report (ECAR) current by reporting any changes that result in an individual or owner acquiring the ability to substantially affect the actions of the institution. Such a change must be reported within 10 days of the change. An individual or corporation has the ability to substantially affect the institution’s actions when they are the institution’s general partner, chief executive officer (or other executive officer), chief financial officer, individual designated as the lead program administrator for the Federal Student Aid programs at the school, or a member of the institution’s board of directors. Condition - The Institute had the following changes that have not been updated in the Officials section on their ECAR: • A Board Member was no longer serving the institution as of May 2021. • A Board Member was added to the Board in March 2024. • A Board Member was no longer serving the institution as of May 2024. • A Financial Aid Officer was no longer active at the institution as of September 2023. • A new Financial Aid Officer was active at the institution as of September 2023. Context - Three of the seven officials listed on the Institute’s ECAR were not active and two officials were not listed. Effect - The Institute is not in compliance with reporting change submissions for their ECAR which could cause the Institute to become ineligible or incur penalties for failing to update information timely. Cause - The Institute’s new Financial Aid Officer was not aware of the need to update ECAR. Recommendation - We recommend any changes to the Institute’s general partner, chief executive officer (or other executive officer), chief financial officer, individual designated as the lead program administrator for the FSA programs at the school, or a member of the school’s board of directors be reported by the Institution within 10 days of the change. Response - Morrison Institute of Technology understands the finding and the importance of timely ECAR updates. The ECAR will be updated as required in the future. Conclusion - Response accepted

Criteria - According to 34 CFR section 685.309, enrollment information must be reported within 30 days whenever attendance changes for a student, unless the organization expects to submit an updated enrollment report within the next 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Condition - Student enrollment reporting was not performed by the Institute after September 2023. Context - Student enrollment reporting was not performed by the Institute after September 2023. Effect - Untimely reporting delays notification of student status changes and could result in ineffective management of the programs. Cause - Morrison Institute of Technology hired a new Financial Aid Officer in September of 2023. The new Officer assumed enrollment reports were being submitted by the enrollment software in use. Recommendation - We recommend the Institute strengthen controls and procedures to ensure enrollment reporting for all students is performed within 30 days whenever attendance changes for students, unless it expects to submit an updated enrollment report within the next 60 days. Response - The Financial Aid Officer has since completed several pertinent training courses through Federal Student Aid Training and has updated all reporting. Enrollment reporting will be completed in a timely manner as required going forward. Conclusion - Response accepted.

Criteria - An institution must keep their Eligibility and Certification Approval Report (ECAR) current by reporting any changes that result in an individual or owner acquiring the ability to substantially affect the actions of the institution. Such a change must be reported within 10 days of the change. An individual or corporation has the ability to substantially affect the institution’s actions when they are the institution’s general partner, chief executive officer (or other executive officer), chief financial officer, individual designated as the lead program administrator for the Federal Student Aid programs at the school, or a member of the institution’s board of directors. Condition - The Institute had the following changes that were required to be updated on their ECAR: • The V.P. of Finance (equivalent to a chief financial officer) was no longer active at the institution as of April 2022. • A Board Member was no longer serving the institution as of May 2021. • A Board Member was added to the Board in October 2021. These changes to the Institute’s ECAR information were not submitted until June 2023, subsequent to inquiry by auditors. Context - Two of the seven officials listed on the Institute’s ECAR were not active and one official was not listed. Effect - The Institute is not in compliance with reporting change submissions for their ECAR which could cause the Institute to become ineligible or incur penalties for failing to update information timely. Cause - Although the changes for the ECAR were initiated in the E-app program by the Financial Aid Director in May 2022 the final review and submission by the President was not performed until June 2023. Recommendation - We recommend any changes to the Institute’s general partner, chief executive officer (or other executive officer), chief financial officer, individual designated as the lead program administrator for the FSA programs at the school, or a member of the school’s board of directors be reported by the Institution within 10 days of the change. Response - Morrison Institute of Technology understands the finding and the importance of timely ECAR updates. Conclusion - Response accepted.

Criteria - Quarterly public reporting for grants received under the Education Stabilization Fund are required to be posted to the Institute’s primary website no later than 10 days after the end of each calendar quarter. Condition - The Institute provided support to show that 3 of 4 quarterly reports selected for testing were posted to their website within 10 days after the end of the calendar quarter. The Institute stated that 1 of the 4 quarterly reports was posted timely; however, the Institute was unable to provide information to show the date of the posting to their website. At the time of the audit, all reports were posted on the Institute’s website. Effect - As a result of this condition, auditors were not able to determine if the required information was provided to the public timely and therefore, unable to determine if the Institute was in compliance with the grant requirements. Cause - Documentation supporting the date the quarterly report was posted to the Institute’s website was not maintained. Recommendation - We recommend that the Institute establish controls and procedures to ensure quarterly reporting is posted timely in accordance with the grant requirements. Response - Documentation of grant reporting will be maintained in multiple locations for future grant programs. Quarterly reporting is completed for the Education Stabilization Fund. The funds have been expended and the programs are in the closeout process. Conclusion - Response accepted.

2022-003 Student Aid Grants Criteria - When making grants to students under the Education Stabilization Fund - student aid portion, institutions must prioritize students with exceptional need. The Higher Education Emergency Relief Fund III Frequently Asked Questions, question #12 further states that if the institution established preconditions for students to receive emergency financial aid grants (e.g., (1) establishing a minimum GPA, (2) imposing other academic or athletic performance or good standing requirements, (3) requiring continued enrollment in the institution or (4) required the student to first pay any outstanding debt or balance) that results in failure to prioritize students with exceptional need. Condition - During fiscal year 2022, the Institute incurred expenses for student aid grant payments that contained academic, performance or attendance provisions: ? $17,000 of student aid grants established a minimum GPA ? $12,000 of student aid grants included performance measures ? $16,000 of student aid grants were paid to students that had been nominated by high school counselors for attendance at the Institute ? $6,759 of student aid grants were for students with parents who graduated from the institution Effect - As a result of grants containing academic or attendance provisions, students with exceptional need were not prioritized. Cause - The identified non-compliance was caused by the interpretation of how to ?prioritize students with exceptional need.? The root of this cause was the fluid nature of guidance on administrating Educational Stabilization Funds and how the guidance would ultimately be interpreted. Questioned Costs - $51,759 Context - During fiscal year 2022, the Institute incurred expenses for student aid grant payments totaling $275,050. Of this amount, it was noted that student aid grants issued totaling $51,759 contained academic or attendance provisions. Recommendation - We recommend that the Institute establish controls and procedures to ensure that grants to student under the Education Stabilization Fund - student aid portion prioritize students with exceptional need. Response - It is our position that students with an exceptional need were prioritized through the Cares Student Emergency Hardship Grant. Throughout the funding period students with exceptional or acute need have had access to an emergency grant application. Applications are reviewed by a committee and awarded for eligible expenses to students who demonstrate exceptional need. All enrolled students have access to this application. Conclusion - Response accepted.

2022-004 Student Aid Disbursements Criteria - Disbursements made under the student aid portion of the Education Stabilization Fund are required to be made directly to students. The Higher Education Emergency Relief Fund III Frequently Asked Questions, question #11 further states that Institutions may not use the emergency financial aid grants to satisfy a student?s outstanding account balance, unless it has obtained the student?s written (or electronic), affirmative consent. Condition - In 1 of 21 students selected for testing it was noted that a student aid grant was applied to a student?s account balance without written (or electronic), affirmative consent. Effect - As a result of this condition, the student was not given a direct payment for use as emergency relief in response to the effects of coronavirus. Cause - The cause of this noncompliance was a lack of sufficient communication among staff and a lack of prompt corrective action. Recommendation - We recommend the Institute establish controls and procedures to ensure student aid grant payments are made directly to students unless the Institute obtains student?s written (or electronic), affirmative consent to apply the funds to the student?s account. Response - There was some initial confusion over which account these funds were to be applied to. The fund administrator applied the funds to the student HEERF funds rather than the Institutional funds. Upon realization of where the funds originated, the financial aid and fiscal operations departments then generated election forms for students. Since this particular student was no longer enrolled at the college, the election form was not returned. Conclusion - Response accepted.

2022-005 Quarterly Reporting Criteria - Quarterly public reporting for institutional and student aid portion expenses of the Education Stabilization Fund are required to be posted to the institution?s primary website no later than 10 days after the end of each calendar quarter. Condition - The Institute stated 3 of 4 quarterly reports selected for testing were not posted to their website within 10 days after the end of the calendar quarter. The Institute stated 1 of the 4 quarterly reports selected for testing was posted timely; however, the Institute was unable to provide information to show the date of the posting to their website. At the time of the audit, all reports were posted on the Institute?s website. Effect - As a result of this condition, the required information was not provided to the public timely and therefore, not in compliance with the grant requirements. Cause - The cause of the lack of timely reporting evidence was due to the untimely submission of the reports. The reports are currently posted and are present in the required locations. Recommendation - We recommend that the Institute establish controls and procedures to ensure quarterly reporting is posted timely in accordance with the grant requirements. Response - Largely, the demands of operating a college during a pandemic, and the constantly changing reporting requirements caused an inappropriate prioritization of the reporting and the documentation of the date of reporting. Conclusion - Response accepted.

Criteria - According to 34 CFR section 685.309, enrollment information must be reported within 30 days whenever attendance changes for a student, unless the organization expects to submit an updated enrollment report within the next 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Condition - In 5 of 37 students tested, student status changes for graduates were not reported within the required time period. Effect - Untimely reporting delays notification of student status changes and could result in ineffective management of the programs. Cause - Students were reported untimely due to the Institute scheduling the submission of graduate changes more than 60 days after the graduation date. Recommendation - We recommend the Institute strengthen controls and procedures to ensure enrollment reporting for all students is performed within 30 days whenever attendance changes for students, unless it expects to submit an updated enrollment report within the next 60 days. Response - Morrison Institute of Technology acknowledges the finding. The Institute will develop additional procedures to ensure students are reported timely to the National Student Clearinghouse. Conclusion - Response accepted.

Criteria - According to 34 CFR 668.165, an institution must notify the student, or parent, in writing of (1) the anticipated date and amount of the disbursement; (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 or loan disbursement. Condition - In 1 of 37 students tested, a student was not notified of their loan disbursement, right to cancel or procedure for canceling the loan disbursement. Effect - Failure to notify students of a loan disbursement does not give the student proper time (14 days) to cancel the disbursement if the student decides they do not want to incur the debt. Cause - The Institute?s software system is set up to automatically send electronic notifications to students upon processing loan disbursements. However, for this particular student, the notification was not sent. Recommendation - We recommend the Institute strengthen controls and procedures to ensure students are being promptly informed of their loan disbursements. Response - Morrison Institute of Technology acknowledges the finding. The Institute will develop additional procedures to ensure students are informed of their loan disbursements in the proper time frame. Conclusion - Response accepted.

Criteria - According to 34 CFR 685.203, the annual loan limits for Federal Direct Student Loans apply to the length of the school's academic year. For an undergraduate student who has not yet successfully completed the first year of study, the subsidized annual loan limit is $3,500. For an undergraduate student who has successfully completed the first year, but has not successfully completed the second year of an undergraduate program, the annual subsidized loan limit is up to $4,500 for a program of study at least an academic year in length. The annual subsidized loan limit for programs with less than an academic year remaining must be prorated. Condition - In 1 of 37 students tested, a student in their second year of an undergraduate program with less than an academic year remaining, had their subsidized loan amount calculated with proration, however, the base loan amount used was incorrect. Effect - Inaccurate calculations of loan amounts available to students may lead students to receive less financial assistance than should have been available. It may also result in students issuing more unsubsidized loans, and incurring interest, when subsidized loans should have been available. Cause - The Institute stated the incorrect amount was used due to a manual error in calculating the loan amount available to the student. Recommendation - We recommend the Institute strengthen controls to ensure loan amounts offered to students are accurate. Response - Morrison Institute of Technology acknowledges the finding. The Institute will develop additional procedures to reduce the risk of errors in the future. Conclusion - Response accepted.

Criteria - According to 16 CFR 314, institutions must develop, implement and maintain an information security program and must perform risk assessments addressing the three required areas noted in 16 CFR 314.4(b) which are (1) employee training and management; (2) information systems, including network and software design, as well as information processing, storage, transmission and disposal; and (3) detecting, preventing and responding to attacks, intrusions, or other systems failures. Institutions must design and implement safeguards to address the risks identified. Condition - Although the Institute has policies and procedures in place to address risks in various areas of its operations, there is not a comprehensive, written information security program that formally documents risk assessments and the safeguards related to information security. Effect - The Institute may not be properly identifying and addressing all significant information security risks without establishing a formal, comprehensive, written information security program. Cause - The Institute has not established a comprehensive, written information security program that formally documents risk assessments and the related safeguards. Recommendation - We recommend the Institute establish formal, written risk assessments addressing the three required areas noted in 16 CFR 314.4(b) which are (1) employee training and management; (2) information systems, including network and software design, as well as information processing, storage, transmission and disposal; and (3) detecting, preventing and responding to attacks, intrusions, or other systems failures, and expanding current policies and procedures to include specific safeguards in place that address those risks. Response - Morrison Institute of Technology acknowledges the finding. The Institute will develop, implement and maintain an information security program. Conclusion - Response accepted.

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