MEMPHIS THEOLOGICAL SEMINARY OF THE CUMBERLAND PRESBYTERIAN CHURCHNon-Profit

Criteria: The Seminary applied for and was awarded a grant from the Higher Education Emergency Relief Fund for the Improvement of Postsecondary Education on September 15, 2020. The award was based on the application that was submitted in July 2020. In applying for the grant, the Seminary completed a budget that was submitted to the U.S. Department of Education. As part of the budget submission process, the Seminary held discussions with personnel from the U.S. Department of Education?s Office of Postsecondary Education as to the costs that were submitted in the budget in an effort to ensure compliance with funding requirements. Based on the discussions held, the Seminary was assured that the total costs in a revised budget submitted to the Department of Education on October 1, 2020, were allowable under the grant. During fiscal year 2021, the Seminary received reimbursement of $449,096 in budgeted costs through the G5 system. On March 19, 2021, the U.S. Department of Education issued a frequently asked questions (FAQ) document which contained a list of costs that were not allowable under the HEERF grant. One of those unallowable costs was lost donations. Lost donations was a $97,532 budgeted item in the Seminary?s revised budget submitted to the Department of Education. After becoming aware of this FAQ, the Seminary has repeatedly tried to engage the U.S. Department of Education in providing an answer if such unallowable costs budgeted, submitted, and reimbursed before the FAQ was published would be subject to recoupment. The U.S. Department of Education has not yet provided the Seminary with an answer to their inquiry. Condition: Management is responsible for understanding and complying with the requirements of laws, regulations, and the provisions of contracts and grant agreements related to each federal award. Cause: Due to the rapid implementation of the federal grant programs under the CARES Act and subsequent pandemic related legislation, adequate guidance was not available to ensure compliance. Effect: The Seminary was reimbursed for a budgeted cost item that was later defined as unallowable under the grant. Questioned Costs: Since the U.S. Department of Education has not yet provided the Seminary with an answer to their inquiry, questioned costs cannot be determined at this time. Context: We reviewed the reimbursement documentation of the Seminary and determined that the FAQ issued by the Department of Education subsequent to the budgeting, submission, and reimbursement stated that revenues from lost contributions was unallowable under the grant. Recommendation: Management should continue to seek an answer from the U.S. Department of Education regarding whether the reimbursed amount for lost donations would be subject to recoupment.