Grace Christian UniversityHigher Education

Department of Education COVID-19 Higher Education Emergency Relief Fund (HEERF) – Assistance Listing #84.425E, #84.425F #2023-002 – Major Federal Award Finding – Procurement and Suspension and Debarment Material Weakness in Internal Controls over Compliance This is a repeat of prior year finding #2022-002. Conditions: We noted during testing of procurement for the HEERF program (Institutional Aid) that the University’s procurement policy was not being followed. Competitive bids were not obtained for projects over the simplified acquisition threshold. Criteria: Federal regulations 2 CFR Section 200.317- 200.326 provide that the University must have and use documented procurement procedures and follow written standards that promote full and open vendor competition. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in §200.320, depending upon the dollar value of the purchase or contract. Cause/Context: We tested two transactions over the micro purchase threshold. These transactions were subject to the procurement processes required by the Uniform Guidance as it relates to price quotations. We tested two transactions for a vendor over the simplified acquisition threshold. These transactions were not subject to the procurement processes required by the Uniform Guidance as it relates to price quotations and/or competitive bids. Recommendation: Management should review the University’s procurement policy and update appropriately to reference Uniform Guidance and specific purchasing thresholds. The University should ensure that it follows the requirements outlined in its procurement policy in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The University agrees with the recommendations put forth by the auditors. The University will review its current procurement policy to include federal regulations 2 CFR Section 200.317-200.326. Proper oversight will be provided over the procurement process. See also attached Corrective Action Plan.

Department of Education COVID-19 Higher Education Emergency Relief Fund (HEERF) – Assistance Listing #84.425E, #84.425F #2023-003 – Major Federal Award Finding – Reporting Significant Deficiency in Internal Controls over Compliance This is a repeat of prior year finding #2022-003. Conditions: We noted during testing of two quarterly reports and one annual report required under the HEERF program that the two quarterly reports selected for testing were not filed timely. There were also no review procedures in place surrounding these quarterly reports. In addition, some inaccuracies were noted within the annual reporting. Criteria: Federal regulations 2 CFR Section 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The quarterly reports for institutional and student aid are required to be updated and posted to the website within 10 days of the end of the quarter. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. Cause/Context: The University did not meet the reporting deadline requirements set forth by the Department of Education for the HEERF program. Only one individual was involved in the reporting process for the quarterly reports. There is a higher likelihood of errors going undetected in the absence of monitoring and review. Inaccuracies were noted in the amounts reported in the 2022 calendar annual report for HEERF student disbursements and institutional expenditures. Recommendation: Management should review the University’s practices related to reporting under the HEERF program to ensure that reports are submitted timely and that more than one individual is involved in the reporting process. Management should also submit a revision of the HEERF calendar 2022 annual report once the reporting portal is reopened by the Department of Education. Views of Responsible Officials and Planned Corrective Actions: The University agrees with the recommendations put forth by the auditors. The University will submit a revised report for the 2022 calendar year and will put a procedure in place to ensure that all reports are reviewed prior to submission. See also attached Corrective Action Plan.

Department of Education COVID-19 Higher Education Emergency Relief Fund (HEERF) ? Assistance Listing #84.425E, #84.425F #2022-002 ? Major Federal Award Finding ? Procurement and Suspension and Debarment Material Weakness in Internal Controls over Compliance Conditions: We noted during testing of procurement for the HEERF program (Institutional Portion) that the University?s procurement policy was not being followed. Multiple price quotations were not obtained for projects over the micro purchase threshold, and competitive bids were not obtained for projects over the simplified acquisition threshold. Criteria: Federal regulations 2 CFR Section 200.317- 200.326 provide that the University must have and use documented procurement procedures and follow written standards that promote full and open vendor competition. Methods included in written standards covering the acquisition of property or services under a Federal award or sub-award must be consistent with specific thresholds as set forth in CFR 200.320. There are five allowable procurement methods described in ?200.320, depending upon the dollar value of the purchase or contract. Cause/Context: We tested five transactions over the micro purchase threshold. None of these transactions were subject to the procurement processes required by the Uniform Guidance as it relates to price quotations and/or competitive bids. Recommendation: Management should review the University?s procurement policy and update appropriately to reference Uniform Guidance and specific purchasing thresholds. The University should ensure that it follows the requirements outlined in its procurement policy in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Finding has been reviewed and addressed. See attached Corrective Action Plan.

Department of Education COVID-19 Higher Education Emergency Relief Fund (HEERF) ? Assistance Listing #84.425E, #84.425F #2022-003 ? Major Federal Award Finding - Reporting Significant Deficiency in Internal Controls over Compliance Conditions: We noted during testing of two quarterly reports and one annual report required under the HEERF program that the two quarterly reports selected for testing were not filed timely. There were also no review procedures in place surrounding the reporting process to the Department of Education for the HEERF program. The lack of review procedures in place resulted in inaccuracies noted within the annual reporting. Criteria: Federal regulations 2 CFR Section 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The quarterly reports for institutional and student aid portion are required to be updated and posted to the website within 10 days of the end of the quarter. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. Cause/Context: The University did not meet the reporting deadline requirements set forth by the Department of Education for the HEERF program. Only one individual was involved in the reporting process. There is a higher likelihood of errors going undetected in the absence of monitoring and review. Inaccuracies were noted in the amounts reported in the 2021 calendar annual report for HEERF student disbursements and institutional expenditures. One error out of a sample of forty tested was also noted with the tracking of student responses regarding receipt preferences for HEERF proceeds. Recommendation: Management should review the University?s practices related to reporting under the HEERF program to ensure that reports are submitted timely and that more than one individual is involved in the reporting process. Management should also submit a revision of the HEERF calendar 2021 annual report once the reporting portal is reopened by the Department of Education. Views of Responsible Officials and Planned Corrective Actions: Finding has been reviewed and addressed. See attached Corrective Action Plan.

#2021-001 ? Major Federal Award Finding ? Special Tests and Provisions Significant Deficiency in Internal Controls over Compliance Criteria: Federal regulations 34 CFR Section 668.164 paragraph (h)(2) provide that if disbursements to or on behalf of students create a credit balance in the student account and the student or parent did not provide an authorization for the institution to retain funds, the institution must provide the credit balance amount to the student within fourteen days of the date the balance was created. The University should ensure that it has sufficiently designed controls surrounding the timely resolution of student credit balances, and that those controls are operating effectively. Condition: During the year ended June 30, 2021, the sample of students selected for testing of the Special Tests and Provisions compliance requirement ? Disbursements to or on Behalf of Students ? included thirty-nine students with credit balances created after disbursements of awards. Of these thirty-nine students tested, one of the students had a credit balance of $1,328 that was not disbursed to the student within the required fourteen days, and this student did not provide an authorization for the institution to retain funds on file. Effect: The effect of the above condition could result in disciplinary action as determined by the Department of Education. Cause: The University did not obtain an authorization to retain funds form from the student noted above since the student did not attend the mandatory check-in day at the University. Subsequent to the student?s graduation after the Fall 2020 semester, the University did email the student as part of the exit process, and notified the student of the credit balance and the impending check with the balance. However, the check was not mailed timely. Controls surrounding the resolution of credit balances failed to identify that the refund for this student had not been processed. Recommendation: Management should review the process and controls related to the timely disbursement of credit balances to students to verify that controls are properly designed and effectively operating, such that disbursements occur within fourteen days unless the University has an authorization to retain funds to ensure compliance with 34 CFR Section 668.164 paragraph (h)(2). Questioned Costs: None reported. Once the University was made aware of the outstanding credit balance, the funds were disbursed to the student. Views of Responsible Officials: Finding has been reviewed and addressed. See attached Corrective Action Plan.