ECMC EDUCATION, INC.

Finding 2020-001: Procurement, Suspension and Debarment Federal Program - COVID-19 - Education Stabilization Fund - Institutional Portion Federal Agency - U.S. Department of Education Pass-Through Entity - Not Applicable CFDA Number - 84.425F Federal Award Number - P425F200233 Federal Award Year - June 30, 2020 Criteria General procurement standards outlined in 2 CFR 200.318(a) state that a non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to the applicable Federal law and the standards identified by the Uniform Guidance (sections 200.318 ? 200.326). The Uniform Guidance outlines requirements over the proper oversight of contractors, having written standards of conduct for employees involved in contracting, awarding contracts to responsible contractors, maintaining records documenting the history of procurements including cost price analysis, conducting all transactions in a manner which provides full and open competition, having procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded, utilizing the methods of procurement outlined in the Uniform Guidance, and ensuring every purchase order or contract includes the applicable provisions in Appendix II. Condition Education?s policies and procedures over procurement generally conform to the requirements outlined by the Uniform Guidance with an exception over a suspension and debarment policy. The Uniform Guidance establishes methods of procurements to be utilized which relate to the acquisition of both goods and services. While Education has policies that outline procurement practices, these policies do not fully adhere to the requirements outlined by the Uniform Guidance. Cause Education's policies were not compared to Uniform Guidance to ensure all elements were incorporated prior to entering into a contract with vendors for which federal funds were the source of the expenditure. Specifically, Education?s practices were not designed appropriately to check for suspension and debarment of the contractor to be utilized. Context We compared Education?s policies and procedures to the applicable sections of the Uniform Guidance by reviewing six suppliers of a total of twenty-four suppliers and obtained the associated supporting documentation for our selection. We noted for the six transactions tested, Education did not meet the requirement for verifying for vendor suspension or debarment. The sample was not statistically valid. Effect Education is at risk of procuring goods and services that are not in compliance with the requirements outlined by the Uniform Guidance, which increases the risk of federal expenditures being used improperly or Education entering into a covered transaction with a vendor that is debarred, suspended, or otherwise excluded. Questioned Costs: Not applicable. Recommendation We recommend Education revise its policies and procedures to conform to the requirements of Uniform Guidance for the costs incurred with relevant awards, and implement procedures and controls to verify that a vendor with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Relevant employees should be trained on these new policies and procedures. Management?s Response ECMC Education has implemented policies and procedures over procurement to conform with Uniform Guidance for costs incurred with relevant awards and to ensure vendors are not debarred, suspended or otherwise excluded. In addition, relevant employees will be trained on these new policies and procedures.

Finding 2019-001: Borrower Data Transmission and Reconciliation (Direct Loan) Federal Program - Federal Direct Student Loans Federal Agency - U.S. Department of Education Pass-Through Entity - Not Applicable CFDA Number - 84.268 Federal Award Number - P268K191689, P268K201689 Federal Award Year - June 30, 2019, June 30, 2020 Criteria Title IV regulations (OMB No. 1845-0021 and 82 FR 29061) require an institution to report all loan disbursements and submit required reports to Common Origination and Disbursement (COD) within 15 days of disbursement. Condition / Context The date reported to COD for one of the twenty-five students tested was not updated timely or accurately to reflect the date reported by the Organization on the student?s institutional record. There were 5,978 individual Direct Loan disbursements that occurred during the year. The sample was not a statistically valid sample but was determined using Chapter 21 - Audit Sampling Considerations of Uniform Guidance Compliance Audits of the Government Auditing Standards and Single Audits Audit and Accounting Guide. Questioned Costs Not applicable. Cause The student?s record was identified as a reject during the normal course of reviewing transmission data between COD and the Organization?s student information system. However, the record was not updated in COD to accurately reflect the date of disbursement used on the student?s institutional record. Effect The student?s Direct Loan information may be inaccurately reported to the Secretary and subsequently, to lenders or servicers, resulting in inaccurate accrual of interest, subsidy or disbursement data. Recommendation The Organization should ensure its procedures are followed to ensure that within 15 days after making the disbursement or becoming aware of the need to adjust a previously reported disbursement, disbursement records are reported to COD. Management?s Response Review procedures were updated to reduce the potential for human error, including additional reviews as rejected response files are received. In addition, a quarterly process was implemented that includes comparing a sample of disbursements posted to student accounts to dates reflected in the Common Origination and Disbursement system.