LAKE MICHIGAN COLLEGE

Assistance Listing, Federal Agency, and Program Name - Student Financial Assistance Cluster Federal Direct Student Loans Program (ALN 84.268); Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass through Entity - None Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The College has 60 days from the date of the College determines an enrollment status change to report to the National Student Loan Data System (NSLDS). The enrollment reporting must be updated for changes in the data elements for the campus record and program record and submitted electronically through the batch method, spreadsheet submittal, or the NSLDS website (34 CFR 685.309). Condition - The College did not update the student enrollment information for any of the students graduating in Fall of 2024. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - None Context - The process for submitting the enrollment status change includes using the National Student Clearing House, a third party, which ultimately submits the status changes to NSLDS on behalf of the College. The submission of graduated students was returned to the College with a notice of error and was not transmitted to NSLDS. The College never resubmitted the graduates to NSLDS for proper enrollment status. Cause and Effect - The College did not have formal procedures to verify that the National Student Clearing House has accurately reported the data provided by the College to NSLDS resulting in inappropriate enrollment status reported to NSLDS. Recommendation - The College should consider implementing a process to review all submissions to NSLDS to ensure the required reporting elements are submitted by the use of the third party. Views of Responsible Officials and Corrective Action Plan - Lake Michigan College understands the significance of accurately reporting student enrollment statuses and will implement enhanced oversight controls. This includes the creation of a log that now documents file “receipts” from the National Student Clearinghouse. These report receipts are then reconciled to file submissions to ensure all files were received. Additionally, we have implemented a more overarching review that ensures all files are adequately processed by the National Clearinghouse.

Assistance Listing, Federal Agency, and Program Name Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268), Federal Work Study Program (ALN 84.033), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass through Entity - None Finding Type - Significant deficiency Repeat Finding - Yes 2024-001 Criteria - If an institution enters into a Tier One arrangement with a third party servicer, as defined in CFR 668.164(e)(1), the institution must provide to the secretary an up to date URL for the contract and contract data, as described in paragraph (e)(2)(vii) of this section for publication in a centralized database accessible to the public. Condition - Colleges are required to disclose the arrangement on their website, as well as other disclosure requirements outlined in 34 CFR 668.164. The school did not provide a URL for the contracts or cost information of its Tier One provider to the Department of Education for publication in the Cash Management Contracts Database. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - None Context - The College did not provide a URL for the contracts or cost information of its Tier One provider to the Department of Education for publication in the Cash Management Contracts Database. Cause and Effect - A control was lacking to ensure the URL for the contract of its Tier One Provider was published in the Cash Management Contracts Database. Recommendation - We recommend a control be implemented to ensure new contracts or cost information are published in the Cash Management Contracts Database. Views of Responsible Officials and Planned Corrective Actions - The URL associated with Lake Michigan’s required disclosure has now been provided to the secretary via the associated Department of Education’s instructions.

Assistance Listing, Federal Agency, and Program Name Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year - Various Pass through Entity - None Finding Type - Significant deficiency Repeat Finding - Yes 2024-002 Criteria - If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance but before he or she has attended 60 percent of the scheduled length of the semester, the school must perform a return of Title IV funds (R2T4) calculation. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. A school must return unearned funds for which it is responsible no later than 45 days from the determination of a student's withdrawal (30 days if never attended) (34 CFR 668.220(1)). When a recipient of Title IV grant or loan assistance 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 aid earned by the student as of the student's withdrawal date. Condition - The College did not perform an accurate calculation to determine the amount of funds to return of Title IV funds for 2 students. Questioned Costs - $1,247 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - Questioned costs of $1,247 resulted from the College calculating a return of Title IV funds of $1,195 and the actual amount of funds returned was $2,442. Context - Of the 40 students tested, there was 2 students for whom there was error in the calculation that resulted in the improper amount being returned to the Department of Education. Cause and Effect - A control was not operating appropriately to ensure amounts calculated to be refunded agree to the actual amounts refunded to the Department of Education. Recommendation - The College should implement procedures and controls to review the calculations to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions - Accuracy in performing the required Return to Title IV Funds function is of significant importance to Lake Michigan College. Currently, a second individual performs an independent review of a sample of calculations. Although we find these two scenarios to be isolated in nature, we will increase our quality control sample review. We are also investigating how we might automate more of the process in order to help reduce any manual error.

Assistance Listing, Federal Agency, and Program Name - 21.027 COVID 19 Coronavirus State and Local Fiscal Recovery Funds, Academic Catch up Program, ADN to BSN Completion Grant Program, Reconnect Age Expansion Grant Program Federal Award Identification Number and Year - SLFRP0127 and GG 186 240000003828 Pass through Entity - Michigan Community College Association and Michigan Department of Lifelong Education, Advancement, and Potential Finding Type - Material weakness Repeat Finding - No Criteria - When awarding contracts over $25,000, the College is required to review and maintain evidence that the vendors are neither suspended or debarred. Condition - The College did not perform suspension or debarment for vendors subject to the College's sole source justification procurement process. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - None Context - Of the two purchases that were tested for suspension and debarment, there was not adequate documentation for the one vendor that was subject to the sole source procurement process to determine the College verified the vendor was not suspended or debarred. Cause and Effect - The College had not established a control to ensure that contracts and vendors subject to their sole source justification procurement process were reviewed for supsenion and debarment. Recommendation - The College should implement a process to review certificates or other support to verify that vendors are not suspended or debarred. Views of Responsible Officials and Planned Corrective Actions - The College will implement procedures to ensure suspension and debarment verification is consistently performed for vendors subject to sole source justification. Specifically, SAM.gov verification will be conducted and documented prior to approving a sole source request, during contract review, and before issuing a purchase order. A Procurement Checklist will be implemented to ensure this verification step is completed as part of the procurement process. Additionally, evidence of the SAM.gov search, such as a screenshot or saved record, will be retained in the procurement file to support compliance.

Assistance Listing, Federal Agency, and Program Name Student Financial Assistance Cluster Federal Direct Student Loans Program (ALN 84.268), Federal Work Study Program (ALN 84.033), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year Various Pass through Entity None Finding Type Significant deficiency Repeat Finding No Criteria If an instutiton enters into a Tier one arrangement with a third party servicer as defined in CFR 668.164(e)(1), the institution must provide to the Secretary an up to date URL for the contract and contract data as described in paragraph (e)(2)(vii) of this section for publication in a centralized database accessible to the public. Condition Colleges are required to disclose the arrangement on their website as well as other disclosure requirements outlined in 34 CFR 668.164. The school did not provide a URL for the contracts or cost information of its Tier One provider to the Department of Education for publication in the Cash Management Contracts Database. Questioned Costs None Identification of How Questioned Costs Were Computed None Context The College did not provide a URL for the contracts or cost information of its Tier One provider to the Department of Education for publication in the Cash Management Contracts Database. Cause and Effect A control was lacking to ensure the URL for the contract of its Tier One Provider was published in the Cash Management Contracts Database. Recommendation We recommend a control be implemented to ensure new contracts or cost information are published in the Cash Management Contracts Database. Views of Responsible Officials and Planned Corrective Actions Annually update the college website with contract and/or cost information regarding the third-party provider. Provide contract information URL to ED for publication in the Cash Management Contracts Database

Assistance Listing, Federal Agency, and Program Name Student Financial Assistance Cluster Federal Direct Student Loans Program (ALN 84.268), Federal Supplemental Educational Opportunity Grant Program (ALN 84.007), and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year Various Pass through Entity None Finding Type Significant deficiency Repeat Finding No Criteria If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance but before he or she has attended 60 percent of the scheduled length of the semester, the school must perform a return of Title IV funds (R2T4) calculation. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. A school must return unearned funds for which it is responsible no later than 45 days from the determination of a student's withdrawal (30 days if never attended) (34 CFR 668.220)(1)). When a recipient of Title IV grant or loan assistance 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 aid earned by the student as of the student's withdrawal date. Condition The College did not perform an accurate calculation to determine the amount of funds to return for Title IV funds (R2T4) for 1 student. Questioned Costs $533 Identification of How Questioned Costs Were Computed Questioned costs of $533 resulted from the College calculating a return of Title IV funds of $648 and the actual amount of funds returned was $1,201. Context Of the 40 students tested, there was 1 student that had error in the calculation that resulted in the improper amount being returned to the Department of Education. Cause and Effect A control was not operating appropriately to ensure amounts calculated to be refunded agree to the actual amounts refunded to the Department of Education. Recommendation The College should implement procedures and controls to review the calculations to ensure compliance with federal regulations. Views of Responsible Officials and Corrective Action Plan Official withdrawals will be calculated for potential R2T4 upon receipt of notification from the records department. Unofficial withdrawals will be completed within 45 days of receipt of notification from the records department. Financial Aid will keep a record of when a withdrawal is received and when R2T4s are processed. This spreadsheet will be checked on a regular basis. R2T4 calculations will be checked for accuracy in Banner by the director or another staff member before submission.

Assistance Listing, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Direct Student Loans Program (ALN 84.268) and Federal Pell Grant Program (ALN 84.063) Federal Award Identification Number and Year -Various Pass-through Entity -None Finding Type - Significant deficiency Repeat Finding - No Criteria - If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance but before he or she has attended 60 percent of the scheduled length of the semester, the school must perform a return of Title IV funds (R2T4) calculation. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. A school must return unearned funds for which it is responsible no later than 45 days from the determination of a student’s withdrawal (30 days if never attended) (34 CFR 668.220)(1)). When a recipient of Title IV grant or loan assistance 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 aid earned by the student as of the student’s withdrawal date. If an institution does not require instructors to take attendance, the withdrawal date is (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss, or other circumstances beyond the student’s control, the date the institution determines is related to that circumstance; (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Notwithstanding the above, an institution that is not required to take attendance may use as the withdrawal date the last date of attendance at an academically related activity, as documented by the institution (34 CFR668.22(c) and (I)). Condition - The College did not timely return the Title IV funds (R2T4) for 3 students. Questioned Costs -None Context -Of the 40 students tested, there were 3 students who withdrew and while the calculations of the amount to return were correct, the funds were not returned with 45 days of date of determination. Cause and Effect - All of the untimely R2T4 refunds were during the fall semester when the College’s financial aid department was understaffed due to departures. Recommendation - The College should try to incorporate R2T4 into a daily task for staff to ensure compliance with federal regulations are completed timely. Views of Responsible Officials and Corrective Action Plan - As outlined in the audit finding, the auditors noted three of the forty R2T4 transactions reviewed (7.5%) were not completed within the required timeframe. We have reviewed these transactions and agree with the auditor’s determination. Given that only three calculations were identified as late, we consider these to be anomalies and not reflective of our overall operating practice. As the auditors state, all three of these transactions were calculated correctly and were all three associated with the Fall term. Since that time, we have instituted new processes to help ensure the timely processing of all R2T4 calculations. These new processes include cross-training of staff to help ensure complete coverage of duties regarding this task. In addition, financial aid staff relating to R2T4 activities have received additional training with a financial aid consultant to help ensure both timeliness and accuracy.

ALN, Federal Agency, and Program Name - Student Financial Assistance Cluster - Federal Direct Student Loan Program ALN 84.268 Federal Award Identification Number and Year Various Pass-through Entity - None Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2021-002 Criteria - If an institution credits a student ledger account with a direct loan, the institution must notify the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student's ledger account at the institution 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 or loan disbursement and have the loan proceeds returned to the secretary (iii) The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan or loan disbursement (34 CFR Section 668.165(a)(2) and (a)(3)). Condition - The College was not sending notifications meeting the required criteria during the the year. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - The College did not send notifications with the required information included for the entire fiscal year. Cause and Effect - The College did not have a process in place to provide students and parents with required notifications. As a result, students and parents were not provided with the required information. Recommendation - The College should implement a process to ensure notifications sent to students and parents include all required information. Views of Responsible Officials and Planned Corrective Actions - The College has updated their notifications to include the required elements beginning in the Fall 2022 semester.

ALN Number, Federal Agency, and Program Name - Education Stabiliazation Fund - Higher Education Emergency Relief Fund ALN 84.425 Federal Award Identification Number and Year - P425E203216, P425F202937, P425M200864 Pass through Entity - None Finding Type - Significant deficiency Repeat Finding - No Criteria - CARES Act 18004(e) and the CRRSAA 314(e) require an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary at such time in such a manner as the secretary may require. ARP Act 2003 specifies that the same terms and conditions of CRRSAA 314 apply to HEERF III funds. While the acts do not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, pursuant to these requirements, the Department of Education required quarterly public reporting of student portion and institutional portion awards and an annual report. Additionally, quarterly student reports are due 10 days after the end of the quarter. Condition - The College did not submit HEERF student quarterly reports timely and reported inaccurate information in certain line items within the 2021 HEERF annual report. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - The HEERF studently quarterly reports for the fourth quarter of 2021 and the first quarter of 2022 were not prepared until October 2022 and were not posted publicly until February 2023. The annual report reported incorrect figures for the number of unduplicated students who received HEERF grants and the collective value of those grants for calendar year 2021. Cause and Effect - There were inadequate controls implemented to ensure that the required information was properly made available on the College's website on a timely basis and that reports were prepared accurately. Recommendation - The College should implement additional controls to ensure reporting requirements for federal grants are complied with in all instances. Views of Responsible Officials and Planned Corrective Actions - The delay in posting the quarterly reports online was an oversight but they were properly submitted to the US Department of Education timely. We will correct the annual report and resubmit it and going forward we will ensure there is a review of data before it is submitted or posted.

ALN, Federal Agency, and Program Name Student Financial Assistance Cluster Federal Direct Student Loan Program ALN 84.268 and Federal Pell Grants ALN 84.063 Federal Award Identification Number and Year Various Pass through Entity None Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Changes in a student?s status are required to be reported to the National Student Loan Data System (NSLDS) within 30 days of the change or included in a student status confirmation report sent to NSLDS within 60 days of the status change (Pell, 34 CFR Section 690.83(b); Direct Loan, 34 CFR Section 685.309(b)). Condition The College did not report certain students' status changes to NSLDS or submitted inaccurate information, during the fiscal year. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context Of the 25 students tested, there were 10 students who had an enrollment change that was either not reported or reported inaccurately. Specifically, 4 status changes were not reported, 3 were reported with incorrect dates, 2 graduations were reported only as withdrawals, and 1 was reported with an incorrect date at the program level but was reported correctly at the campus level. Cause and Effect The College did not have adequate controls in place to ensure all enrollment changes are reported timely and accurately to NSLDS. As a result, certain student status changes were not reported to the NSLDS in a timely manner. Recommendation The College should implement controls to ensure student status changes are reported accurately and timely to the NSLDS. These controls should include a thorough review of the enrollment rosters prior to reporting to NSLDS. Views of Responsible Officials and Corrective Action Plan - Lake Michigan College takes the issue of compliance very seriously. We strive to establish process that ensure strong internal controls are present. We took at strong look at our operations and are committed to ensuring our processes are at the highest level of transparency and accuracy. The College will review and update internal controls around determination and reporting of (1) official withdraws, (2) unofficial withdraws, and (3) graduate enrollment status updates. LMC will also send a Graduates Only file to National Student Clearinghouse within 30 days of the end of each semester. For four of the other instances noted (two not reported and two reported as withdrawn and not graduated), our research shows that we did submit the proper information; however, files were rejected by the Clearinghouse. We understand it is our responsibility to identify these situations and take the appropriate corrective action. Starting immediately, we have added an additional review to ensure that all rejected files are identified and corrective action taken.

ALN, Federal Agency, and Program Name Student Financial Assistance Cluster Federal Direct Student Loan Program ALN 84.268 Federal Award Identification Number and Year Various Pass through Entity None Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria If an institution credits a student ledger account with a Direct Loan, the institution must notify the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the students ledger account at the institution 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 or loan disbursement and have the loan 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 or loan disbursement. (34 CFR section 668.165(a)(2) and (a)(3)). Condition The College was not sending notifications meeting the required criteria during the the year. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context The College did not send notifications with the required information included. Cause and Effect The College did not have a process in place to provide students and parents with required notifications. As a result, students and parents were not provided with the required information. Recommendation The College should implement a process to ensure notifications sent to students and parents include all required information. Views of Responsible Officials and Planned Corrective Actions - The ability of students to properly manage loan debt is of upmost important to Lake Michigan College. We understand that students must know the tools available to them in order to make informed decisions, including the required referenced letter. We have assembled a group of financial aid and IT staff to address this omission and to immediately rectify the issue. This situation will be corrected prior to disbursements of the upcoming Fall term financial aid.

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