Duke UniversityHigher Education

Finding No. 2021-001: Cash Management Federal Program: Student Financial Assistance Cluster Federal Award Year: July 1, 2020 through June 30, 2021 Federal Award Number and Federal Award Agency CFDA 84.033, 84.007, U.S Department of Education Criteria or Requirement Per 34 CFR section 668.162(a), the institution must make the disbursements as soon as administratively feasible, but no later than three business days following the receipt of funds. Condition Found, Including Perspective For 1 out of 27 cash draws, Duke was advanced funds in the amount of $1,327,934 which were not disbursed to students within three days of receipt of the funds. The funds were received on 11/10/2020 and were disbursed over the following two months. The interest calculated for the undisbursed funds over the two-month period between receipt of initial funds and total disbursement of funds was less than $500, the threshold over which interest must be remitted to the federal agency. Possible Cause and Asserted Effect Duke?s internal controls for determining that funds drawn from the Department are disbursed within three days of receipt were not operating effectively related to funds drawn in advance of expenditures. Accordingly, Duke maintained the Department?s funds in excess of three days from receipt of funds without associated student disbursements. Questioned Costs None. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend Duke enhance the precision of the control around the timing of disbursement of funds received in advance of disbursements to students. Views of Responsible Officials Duke University concurs with this finding. To ensure all federal funds meet cash management requirements, the Financial Aid Office of Duke University will update its processes to ensure that for student financial aid, funding for disbursements to eligible students will be requested under the reimbursement method.

Finding No. 2021-002: Loan Disbursement Notifications Federal Program: Student Financial Assistance Cluster Federal Award Year: July 1, 2020 through June 30, 2021 Federal Award Number and Federal Award Agency CFDA 84.268; U.S Department of Education Criteria or Requirement Per 34 CFR section 668.165, if an institution credits a student?s account with a Direct Loan, the institution must notify the student or parent in writing of the anticipated date and amount of the loan disbursement, 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 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. Condition Found, Including Perspective For 1 out of 40 students selected, the student did not receive a loan disbursement notification in writing for one or more disbursements. Possible Cause and Asserted Effect Duke?s internal controls for determining that a loan disbursement notification was sent for each loan disbursement made were not operating effectively related to circumstances where multiple PLUS loan disbursements were made to the same student on the same day. Accordingly, Duke did not send a loan notification for the second PLUS loan disbursement made on the same day as another PLUS loan disbursement. There were a total of 15 students that received multiple PLUS loan disbursements on the same day in fiscal 2021. Questioned Costs None. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend Duke enhance the precision of the controls over loan disbursements to ensure that all loan disbursements through the Federal Direct Student Loan Program have a written notification sent to the student and/or parents inclusive of all disbursements even if multiple are made on the same date. Views of Responsible Officials Duke University concurs with this finding. To correct the issue, a review of the program supporting automatic delivery of notifications to loan participants has been conducted. The programming error was isolated and corrected. Additional reviews were performed to ensure all federal loan types are captured and the automated communication processes updated. Periodic reviews of the automated program will be performed to ensure any changes to federal loan types are captured by the system and automated notifications sent to recipients as required by Department of Education guidelines.

Finding No. 2021-003: Allowability Federal Program: COVID-19 ? Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured (CFDA 93.461) Federal Award Year: July 1, 2020 through June 30, 2021 Federal Award Agency U.S. Department of Health and Human Services Criteria or Requirement Per the terms and conditions of the award, the charges must directly relate to the patient?s COVID-19 testing or treatment diagnosis code. Per 2 CFR 200.303, the nonfederal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found, Including Perspective For 1 out of 40 patients sampled, the HRSA reimbursement was not related to a COVID-19 testing or treatment diagnosis code. Duke refunded Health Resources and Services Administration (HRSA) for the amount that was paid on this claim as a result of the audit process. The amount paid on this claim was $14,997 and the sampled population was $2,118,621. Possible Cause and Asserted Effect Duke?s internal control did not effectively prevent charges that were not associated with a COVID-19 testing or treatment diagnosis code prior to being submitted to HRSA and therefore, the patient claim was submitted to and reimbursed by HRSA and not refunded timely. Questioned Costs $14,997 Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year This finding is not a repeat of a finding in the immediately prior audit. Recommendation We recommend Duke enhance the precision of the control around timely identification of non-COVID-19 diagnosis codes to prevent submission to HRSA for reimbursement and if reimbursed before identification, we recommend a timely refund to the agency upon identification. Views of Responsible Officials Duke has pre-billing claim edits within the claims processing system to ensure diagnosis and/or procedure code requirements are met as they relate to billing the COVID-19 HRSA Uninsured Testing and Treatment Fund. The control in place identified the erroneous coding, however, the edit was improperly resolved by a staff member resulting in the claim being sent to HRSA. Duke?s internal processes subsequently identified the erroneous claim but Duke was instructed, by HRSA, not to process the refund as HRSA would be performing an audit and would request refunds for claims paid incorrectly. Duke refunded HRSA in April 2022 as HRSA had not yet requested a refund for this claim. Duke will re-train staff on the proper resolution of pre-billing claim edits and will evaluate enhancing the controls around submitting claims to government programs.

Finding No. 2020-001: Cash Management Federal Program: Research and Development Cluster Federal Award Year: July 1, 2019 through June 30, 2020 Federal Award Number and Federal Award Agency See Schedule of Findings and Questioned Costs for chart/table Criteria or Requirement Per 2 CFR section 200.305(b)(3), program costs must be paid by non-Federal entity funds before submitting a payment request or per 2 CFR section 200.305(b)(9), interest earned by non-federal entities on advances of federal funds is required to be remitted annually to the U.S. Department of Health and Human Services. Condition Found, Including Perspective For 14 out of 40 expenditure transactions selected for testing, Duke did not appropriately calculate or remit interest timely when the expenditure was reimbursed from the federal agency prior to being paid from institutional funds. Interest in the amount of $284, relating to sampled expenditures totaling $4,772,231 within the population of total program expenditures, was not appropriately calculated nor remitted timely. Possible Cause and Asserted Effect The data source that management relied on to determine the amount of interest due to federal agencies, based on the time difference between when an invoice was paid compared to the date of the associated federal reimbursement, was not consistently maintained and was, therefore, incomplete. Accordingly, Duke?s internal control processes did not operate consistently to identify all interest required to be remitted for advance payments. Questioned Costs $284 Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend Duke enhance the precision of the control around the data source to ensure that all unpaid expenditures that have been reimbursed by the federal agencies are captured in the query and interest can be appropriately calculated and remitted timely. Views of Responsible Officials Management agrees with this finding and learned of the issue as a result of KPMG's testwork. In response, we determined that the data set being used to source the report was decommissioned and no longer being maintained. This resulted in incomplete data. In order to determine the missing population, we aggregated data from various sources to ensure all transactions on sponsored awards were evaluated. This resulted in an additional $44,720 in interest paid to federal agencies above the original analysis. As a long-term solution, we are in the process of developing and testing a new report that will be used to gather a complete listing of expenses with the appropriate information to calculate the interest due to federal agencies. We will also establish a process to alert users upon execution of reports that the report is no longer reliable when data sets are decommissioned.

Finding 2019-001: Enrollment Reporting Federal Program and Federal Award Number Student Financial Assistance Cluster (CFDA # 84.268, 84.063); P063P181926, P268K191926 Federal Agency U.S. Department of Education Federal Award Year July 1, 2018 through June 30, 2019 Criteria or Requirement Per Section 34 CFR 685.309, a school shall update the student status confirmation report for changes in student status, report the date the enrollment status was effective and return the student status confirmation report to the Secretary within 60 days of receipt. Per Section 2 CFR 200.303, the non-Federal entity must 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. Condition Found, Including Perspective For a nonmajor program, the Student Financial Assistance cluster, while testing the remediation from the prior year finding, for 2 out of 35 students, the change in the student?s status was not reported within the required 60 days. Additionally, for one student of the 35 students, the student?s status was not submitted at all to the National Student Loan Data System (NSLDS). Possible Cause and Effect The control that management sets a predetermined schedule to submit an enrollment report on a monthly basis to ensure timely reporting to the NSLDS and reviews all reports for the accuracy of all data elements prior to submission was not operating at a level to identify all discrepancies. Questioned Costs None identified. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Yes, see prior year finding 2018-001. Recommendation We recommend Duke enhance the precision of the control around the review of timeliness of the enrollment reporting submissions. Views of Responsible Officials Duke University concurs with this finding. The instances of untimely status changes related to students that withdrew in May, when the final report for the academic year was submitted at the end of April. To avoid late withdrawals being undetected, the Office of the University Registrar will run additional student status change reports in both June and July to eliminate this gap. In the instance of the student that was not reported at all, this was due to another institution submitting a student with an identical social security number, and as a result the Duke student was rejected. Going forward, the Office of the University Registrar will have the Office of Student Financial Aid verify any student information that has been rejected by the NSC.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION