LIVINGSTONE COLLEGE

Finding 2025-003 - U.S. Department of Education (ED) Student Financial Assistance Programs - Untimely Release of Title IV Credit Balances - (significant deficiency): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that three (3) out of sixty (60) sampled students had Title IV created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the institution’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs - $0 Perspective – Timely release of Title IV credit balances is one of the Department of Education’s most frequently tested compliance areas. A failure rate of 5% (3 out of 60 students) indicates an isolated oversight. Repeat Finding - No Auditor’s Recommendation - The institution should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. View of Responsible Officials – Procedures will be developed to document the new process and delivery of refunds within the guidelines. The College will introduce a process to ensure there will be a meeting between Students Accounts and Financial Aid to determine the student refunds prior to start of the semester. Both departments will determine the target dates based on the estimated timing of financial aid, as well as completion of college charges to student accounts. Included in this period is time to review the refunds and adjust.

Finding 2025-003 - U.S. Department of Education (ED) Student Financial Assistance Programs - Untimely Release of Title IV Credit Balances - (significant deficiency): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that three (3) out of sixty (60) sampled students had Title IV created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the institution’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs - $0 Perspective – Timely release of Title IV credit balances is one of the Department of Education’s most frequently tested compliance areas. A failure rate of 5% (3 out of 60 students) indicates an isolated oversight. Repeat Finding - No Auditor’s Recommendation - The institution should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. View of Responsible Officials – Procedures will be developed to document the new process and delivery of refunds within the guidelines. The College will introduce a process to ensure there will be a meeting between Students Accounts and Financial Aid to determine the student refunds prior to start of the semester. Both departments will determine the target dates based on the estimated timing of financial aid, as well as completion of college charges to student accounts. Included in this period is time to review the refunds and adjust.

Finding 2025-004 - U.S. Department of Education (ED) Student Financial Assistance Programs - Untimely Return of Title IV Funds (significant deficiency): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.22 (j), (1) institutions must return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew. Condition – During our review of the Return of Title IV Funds (R2T4) calculations, we identified one (1) student for whom the institution did not return unearned Title IV funds within the required 45-day timeframe. The funds were not returned until 102 days after the institution’s date of determination (ED), exceeding the regulatory deadline. Cause – The late return appears to have resulted from insufficient processes to identify and communicate unofficial withdrawals between the Registrar’s Office and the Financial Aid Office in a timely manner, resulting in delayed initiation of the Return to Title IV (R2T4) process. Effect - The institution was not in compliance with federal R2T4 return requirements. Untimely returns reflect weaknesses in the institution’s internal control over Title IV administration and may affect administrative capability under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Returning unearned Title IV funds within 45 days is a core compliance requirement. Institutions must demonstrate the ability to promptly identify withdrawals, calculate R2T4 amounts, and process returns to maintain eligibility for participation in Title IV programs. Repeat Finding – No Auditor’s Recommendation - The institution should implement a formal R2T4 tracking system and strengthen coordination between departments. View of Responsible Officials – Going forward, the Registrar will complete a notice that a student withdrawal with a clear date when the student leaves the college. This notice will be forwarded to Financial Aid and responsibility shift to this department to ensure that the funds are returned within the allowed time limit.

Finding 2025-004 - U.S. Department of Education (ED) Student Financial Assistance Programs - Untimely Return of Title IV Funds (significant deficiency): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.22 (j), (1) institutions must return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew. Condition – During our review of the Return of Title IV Funds (R2T4) calculations, we identified one (1) student for whom the institution did not return unearned Title IV funds within the required 45-day timeframe. The funds were not returned until 102 days after the institution’s date of determination (ED), exceeding the regulatory deadline. Cause – The late return appears to have resulted from insufficient processes to identify and communicate unofficial withdrawals between the Registrar’s Office and the Financial Aid Office in a timely manner, resulting in delayed initiation of the Return to Title IV (R2T4) process. Effect - The institution was not in compliance with federal R2T4 return requirements. Untimely returns reflect weaknesses in the institution’s internal control over Title IV administration and may affect administrative capability under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Returning unearned Title IV funds within 45 days is a core compliance requirement. Institutions must demonstrate the ability to promptly identify withdrawals, calculate R2T4 amounts, and process returns to maintain eligibility for participation in Title IV programs. Repeat Finding – No Auditor’s Recommendation - The institution should implement a formal R2T4 tracking system and strengthen coordination between departments. View of Responsible Officials – Going forward, the Registrar will complete a notice that a student withdrawal with a clear date when the student leaves the college. This notice will be forwarded to Financial Aid and responsibility shift to this department to ensure that the funds are returned within the allowed time limit.

Finding 2023-002 - U.S. Department of Education (USDE). Title IV Student Financial Aid Programs (Deficiency): Information on the federal program: Federal Direct Student Loans, CFDA No. 84. 268, June 30, 2023; Federal Pell Grants Program, CFDA No. 84. 063, June 30, 2023; Federal Supplemental Educational Opportunity Grant, CFDA No. 84. 007, June 30, 2023; Federal Work-Study Program, CFDA No. 84. 033, June 30, 2023. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs- None. Context- We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs a) One (1) out of six (6) students tested for R2T4 did not have Title IV funds returned to the Federal government within the required 45 days. Title IV HEA 34 CFR 668.22. b) The College was not reconciling between Financial Aid and Business Office on the monthly basis per SFA Handbook Ch. 5 CFR668.161-668.176. Cause - Oversight by responsible employees. Effect- The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding - yes Auditor's Recommendation - We recommend that the College ensure adequate documentation is obtained and kept on file as evidence that all expenditures meet allowable cost and other requirements under the grant program. Views of Responsible Officials - Management agrees with this finding. The College will place additional emphasis on the R2T4 of funds. Management is reviewing the timing of presentation of situations to Financial Aid that require returning funds to the Department. Additional focus will be placed on procedures to timely report withdraws to Financial Aid to support returned funds in the required 45 days. In addition, the College prepares monthly reconciliations between Financial Aid and the Business Office, but often delayed in completion. Going forward, the reconciliation will be noted on the monthly closing list and requires both the Assistant Vice President of Financial Aid and Controller to sign and date the reconciliation to demonstrate compliance with the monthly requirement.

Finding 2022-001 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (material weakness): Information on the federal program: Federal Direct Student Loans, Assistance Listing No. 84.268, June 30, 2022; Federal Pell Grants Program, Assistance Listing No. 84.063, June 30, 2022; Federal Supplemental Educational Opportunity Grant, Assistance Listing No. 84.007, June 30, 2022; Federal Work-Study Program, Assistance Listing No. 84.033, June 30, 2022. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs-As provided below." Context- We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs. a. Three (3) out of 60 students tested had missing official transcripts with total questioned costs of $36,516. b. Twelve (12) out of 26 students tested did not have refunds given to students within the required 14 days. c. Two (2) out of six (6) students tested for R2T4 did not have Title IV funds returned to the Federal government within the required 45 days. Cause - Oversight by responsible employees. Effect - The College's participation in the Title IV programs could be subject to USOE sanctions as applicable. Repeat Finding - No Auditor's Recommendation - The College should implement corrective actions to ensure that the above findings are resolved and will not recur in future periods. Views of Responsible Officials - The College concurs with the finding. The College continues to be challenged with finding qualified staff in the Financial Aid Office and Business Office. The College will be working closely with staffing companies to identify qualified personnel. The College is working diligently to ensure all positions are filled to ensure compliance with all federal and state regulations. We understand the seriousness of these findings and implementing appropriate strategies to minimize and/or eliminate further audit findings. The College plans to start implementing these strategies beginning July 1, 2023.

Finding 2021-001 - U.S. Department of Education {USDE), Title IV Student Financial Aid Programs (material weakness): Information on the federal program: Federal Direct Student Loans, CFDA No. 84.268, June 30, 2021; Federal Pell Grants Program, CFDA No. 84.063, June 30, 2021; Federal Supplemental Educational Opportunity Grant, CFDA No. 84.007, June 30, 2021; Federal Work-Study Program, CFDA No. 84.033, June 30, 2021. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs- None noted. Context- We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs. a. Twelve (12) out of 60 student files tested did not have their refunds given to students within the required 14 days. b. Title IV awards for five (5) out of 5 students tested for R2T4 did not have funds returned to the Federal government within the required 45 days. c. The College's Student Financial Aid records had differences in the Federal Pell Grant Programs and Federal Work-Study Programs, which were not reconciled to the general ledger. d. The College submitted unreconciled data on its 2021 FISAP. e. Eight (8) out of eight (8) students' enrollment history data was not available for testing. Cause - Oversight by responsible employees. Effect - The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding- No. Auditor's Recommendation - The College should implement corrective actions to ensure the above finds are resolved and will monitor compliance with Federal regulations periodically to ensure instances of non-compliance are prevented in a timely fashion, relative to enrollment reporting, reconciled correct data report for FISAP, return of Title IV and student refunds. We recommend the College enhance supervisory and accountability controls to identify deviations from internal controls over compliance matters in a timely fashion. Improving the coordination with Student Financial Aid and the Business Office may also help identify certain reconciliation matters that need to be addressed as well. Views of Responsible Officials - The College concurs with the finding. The College experienced several vacancies in the Financial Aid and Business Office during the COVID- 19 pandemic due to short staffing. We have hired four (4) new financial aid staff members to fill positions that directly Impact daily activities. The College is working diligently to ensure all positions are filled to ensure compliance of all federal/state requirements.

Finding 2021-002 - Net Asset Rollforward Schedule, Grant Maintenance and Related Accounting (significant deficiency): Information on the federal program: Coronavirus Relief Fund, CFDA No. 21.019, June 30, 2021. Criteria - Federal and state regulations governing the CARES Act. Coronavirus Relief Fund. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs-$87,973. Context - The College did not provide adequate documentation to substantiate sub-recipient compliance with grants. We observed inaccurate and/or missing information in the net asset roll- forward schedule prepared by the College. It is imperative the College retain appropriate records to support federal, state, and private grant award activity necessary to reconcile to the general ledger and properly report compliance with grant requirements. Additionally, the completeness and accuracy of grant maintenance records, such as the net asset rollforward schedule, are integral for both financial statement preparation and the Uniform Guidance financial and compliance audit. other non-compliance with the Hurt and Hunger grant requirements were noted for the following federal compliance requirements: ? Allowable Activities - Amount recorded as part of general ledger (G/L) detail for the year and G/L expenditure classification determined in accordance with GAAP- The College did not include the Hurt and Hunger grant revenue and related expenditures of $4.36 million in fiscal year ended June 30, 2021 in their net asset rollforward schedule or their general ledger. ? Allowable Costs - Expenditures are consistent with 0MB Uniform guidelines 2 CFR 200, specifically Compliance Supplement 2021 for CFDA 21.019 - Lack of readily available receipts and proof of eligible expenditures required as part of initial application and/or reimbursement purposes was noted for 45 sample selected recipients. Lack of audit readiness contributed to delays in report issuance, as the College worked extensively to locate, consolidate, and submit the information during our audit. Disbursements for the 45 sample items totaled $2.3 million, which represents 54% of the total grant expenditures. We did not receive supporting documentation for $87,973 of the sample $2,373,340 expenditures, which represents non-compliance of less than 4% of the sample. - We noted instances of non-compliance with signed acknowledgement forms or sign-off sheet by recipients of gift cards. Such documentation was required for grant recipients to support their expenditures because of the high risk for fraud. We initially received several illegible receipts. Reporting- - Submit Program Plan - A program plan was not provided, which was required to be submitted "no later than October 15, 2020 or within fifteen (15) days of the Contract approval date of December 4, 2020. ? Subrecipient Monitoring - Submit monthly reports to DHHS - The College submitted all required monthly reports to DHHS, which documented serving more than 1.6 million NC citizens. However, the College could not provide evidence of periodic monitoring of subrecipients throughout the grant period. Cause - Oversight by responsible employees. Effect - The College could be subject to U.S. Treasury Department and/or NC Department of Health and Human Services. Repeat Finding - No. Auditor's Recommendation - We recommend the College focus on improving their accounting and recordkeeping for federal and private grants, including the annual updates to the net asset rollforward schedule. The College should reconcile the information directly to the general ledger each year and record any necessary adjustments in a separate column. Management's Response - The College maintained and recorded the $5M Hurt and Hunger grant activities in a separate general ledger account furnished to the auditors and used it to audit and update the net asset rollforward. The College also opened a separate bank account to account for all transactions. Please also note that net asset rollforward is additional support the College prepares for reporting purposes. The College provided accurate net asset rollforward consistent with what was provided in prior years, and net asset rollforward should be treated like any other rollforward schedule. Accordingly, the net asset rollforward needs to be updated like any other schedule when a proposed audit adjustment or changes are required. The College concurs with the allowable cost related findings. The College has provided management over these funds and worked diligently with necessary clients to provide necessary support and guidance related to the Hurt and Hunger Grant. The College will work to educate other departments to work collaboratively with the Business Office when new programs are implemented and requires support from the Business Office.

Finding 2019-001 ? U.S. Department of Education (USDE), Historically Black Colleges and Universities (HBCU) Capital Financing Loans (Significant Deficiency): Information on the federal program: Historically Black Colleges and Universities (HBCU) Capital Financing Loans, CFDA No. 84.000, June 30, 2019; Program Financing Agreement among The Federal Financing Bank, The Secretary of Education, and Rice Capital Access Program, LLC (Capital Finance Bond Covenants), September 24, 2009. Criteria ? Federal regulations governing the Department of Education programs and Advance drawdown compliance with Capital Finance Loan Agreement ? Article 3, Section 3.2. Condition ? Drawdown request incorrectly included funds provided in advance of expenditures incurred. Not in compliance with financing covenants, as more fully described in the context below. Questioned Costs ? As provided below. Total $1,526,131. Context ? We observed the following conditions in connection with our testing of the various U.S. Department of Education, HBCU Capital Financing Loans Program drawdowns. The College submitted a drawdown request in June of 2019 to pay vendors for restoration and construction cost as part of project costs budgeted under the Capital Financing Loans Program. One (1) of the invoices reviewed was not an invoice for services rendered. Per review, the amount was identified as a cash advance for future services to be provided by the vendor after receipt of the drawdown. The advanced amount, $2,303,571, was deposited into the College?s restricted account. As of January 28, 2020, the vendor has been paid $777,440 for services which were verified. The balance is considered excess federal cash on hand of $1,526,131. Effect ? The College?s participation in the Capital Financing Loans program could be subject to sanctions and the outstanding loans could be called for immediate payment, as applicable. Cause ? Oversight by responsible employees. Recommendation ? The College should contact Rice Capital and determine the disposition of the remaining federal cash on hand. The College should also adhere to the bond covenants regarding authorized drawdowns. Views of Responsible Officials ? The College met with U.S. Department of Education (DOE) and Rice Capital on April 10, 2019 to address project delays and request an extension of the Bond dated December 1, 2018. This extension allowed more time to complete the project and have access to bonds proceeds for that purpose. The extension was accepted by DOE on May 20, 2019. In an effort to stay on schedule, the College requested advanced bond proceeds for KMD-Construction Company (KMD). The advanced bond proceeds have allowed the project to keep moving and make timely payments to KMD. The College is amenable to returning the remaining unspent bond proceeds totaling $1,526,131 and requesting future draws based on actual expenses incurred.

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