Trenholm State Community CollegeHigher Education

Finding 2025-001 – Noncompliance with R2T4 Timeliness Requirements Student Financial Assistance Cluster #34.007, #84.033, #84.063 U.S. Department of Education (ED) Award Period: October 1, 2024 – September 30, 2025 Criteria or Specific Requirement: Return of Title IV Funds: The Code of Federal Regulations, 34 CFR 668.22(j), states that an institution 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: Title IV funds were not returned to the ED within the required 45 days of the institution’s determination that the student withdrew for 2 out of 14 students tested. Questioned costs: None noted as finding is timing related. Cause: The untimely returns for the 2 students resulted from administrative delays related to the processing of individual student withdrawal information. Based on the results of testing, existing procedures generally operated as intended but were not applied timely in these isolated instances. Effect: As a result, the institution did not fully comply with the Return of Title IV Funds timeliness requirement for the affected students. Identification as a repeat finding: Not a repeat finding. Recommendation: We recommend that the College reinforce existing procedures related to monitoring Return of Title IV Funds deadlines to help ensure consistent and timely processing for all student withdrawals. View of responsible official and planned corrective action: There is no disagreement with the audit finding. See management’s corrective action plan.

Reference Number: 2021-005 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Internal Control and Compliance Internal Control Impact: Material Weakness Compliance Impact: Repeat of Prior Year Finding: Nonmaterial Noncompliance 2020-002 (origination) AL Number(s) and Title(s): 84.007 ? Federal Supplemental Educational Opportunity Grants 84.033 ? Federal Work-Study Program 84.063 ? Federal Pell Grant Program Federal Awarding Agency: U.S. Department of Education Federal Award Number: P007A217153, P007A207153, P033A217153, P033A207153, P063P212776, P063P202776 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: None The College did not reconcile the amounts recorded for student Title IV aid reported on the Department of Education systems with amounts recorded for student Title IV aid in the College?s general ledger. Finding Title 34 of the Code of Federal Regulations (CFR) 668 Subpart L ? Financial Responsibility and the Federal Student Aid (FSA) Handbook discuss an institution?s financial responsibility and the required reconciliation process. 34 CFR 668.171(a) states, ?To begin and continue to participate in any title IV, HEA program, an institution must demonstrate to the Secretary that it is financially responsible?? The FSA Handbook states, ?The cash management regulations establish rules and procedures that a school must follow in requesting, managing, and returning FSA program funds. Under the cash management regulations, a school has a fiduciary responsibility to have a system in place to: safeguard FSA funds; ensure FSA funds are used only for the purposes intended; act on the student?s behalf to repay a student?s FSA education loan debt when the school is unable to pay a credit balance directly to the student; and return to the Department any FSA funds that cannot be used as intended.? A key component of the system described is a reconciliation. The U.S. Department of Education has three systems that are involved in the reconciliation process. The Common Origination and Disbursement System (COD) is the system used for processing, storing, and reconciling certain FSA programs. The G5 System is a grants management system. Among other things, the system is used for awards and payments. Finally, the National Student Loan Data Systems (NSLDS) is the Department?s central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of Education programs. The FSA Handbook states, ?Title IV reconciliation is the process by which a school reviews and compares Title IV aid (grants, loans, and Campus-Based aid) recorded on the Department?s systems (COD, G5, NSLDS) with the information in the school?s internal records. Through reconciliation, disbursement and cash discrepancies are identified and resolved in a timely manner to ensure the school meets all regulatory requirements. Schools must document their reconciliation process and retain any reconciliation documentation for audit and review purposes.? Audit tests revealed the College failed to adequately perform all required reconciliations for the Federal Pell Grant (PELL), Federal Supplemental Educational Opportunity Grants (SEOG) and Federal Work Study (FWS) programs during the fiscal year. Due to a lack of properly designed and implemented internal controls requiring complete reconciliations and the retention of supporting documentation, the College was only able to provide partial reconciliations for the PELL, SEOG and FWS programs for the selected months of June and September 2021. In addition, the College was unable to provide appropriate supporting documentation for all amounts for each program from G5, COD or the College's internal records. Consequently, we were unable to determine whether any of the Title IV programs were fully reconciled. Recommendation The College should design and implement internal controls to ensure that the amounts recorded for student Title IV aid on the Department of Education systems (COD, G5, NSDLS) are reconciled with amounts recorded for student Title IV aid in the College?s general ledger and that supporting documentation is retained. Views of Responsible Officials of the Auditee Management agrees with this finding and will take corrective actions.

Reference Number: 2021-006 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Internal Control and Compliance Internal Control Impact: Compliance Impact: Material Weakness Nonmaterial Noncompliance AL Number(s) and Title(s): 84.425 COVID-19 Higher Education Emergency Relief Fund (HEERF) Federal Awarding Agency: U.S. Department of Education Federal Award Number: P425E201909, P425F202434, P425J200083 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: $39,166.01 The College failed to comply with federal procurement standards. Finding Title 2 U. S. Code of Federal Regulations (CFR) Part 200, codifies the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). Section 200.320 describes the methods of procurement to be followed. This guidance includes procedures for small purchases. Small purchases are purchases higher than the micro-purchase threshold but not exceeding the simplified acquisition threshold. During the 2021 fiscal year, the thresholds were $10,000 and $250,000, respectively. When small purchase procedures are used, price or rate quotations should be obtained from an adequate number of sources. However, Section 200.318(a) states, ?The Non-Federal entity must use its own documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward?? The Code of Alabama 1975, Section 41-16-50(a) states, ?With the exception of contracts for public works whose competitive bidding requirements are governed exclusively by Title 39, all expenditure of funds of whatever nature for labor, services, work, or for the purchase of materials, equipment, supplies, or other personal property involving fifteen thousand dollars ($15,000) or more, and the lease of materials, equipment, supplies, or other personal property where the lessee is, or becomes legally and contractually, bound under the terms of the lease, to pay a total amount of fifteen thousand dollars ($15,000) or more?shall be made under contractual agreement entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder?? Since the College must also comply with state law, small purchase procedures can only be used for purchases between the micro-purchase threshold ($10,000) and the threshold set by the Alabama Competitive Bid Law ($15,000). 2 CFR Section 200.320(c) states, ?Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is only available from a single source; (3) The public exigency or emergency will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.? Section 200.318(i) states, ?The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.? Due to a lack of properly implemented internal controls regarding the procurement process, the College awarded three contracts, between the amounts of $10,000 and $15,000, during the fiscal year without obtaining price or rate quotations from an adequate number of sources. These purchases totaled $39,166.01. If the purchases qualified for non-competitive proposals, records sufficient to detail the history of the procurement were not maintained. Recommendation The College should design and implement internal controls to ensure compliance with the Uniform Guidance requirements related to procurement transactions. Views of Responsible Officials of the Auditee Management agrees with this finding and will take corrective actions.

Reference Number: 2021-007 Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control and Compliance Internal Control Impact: Compliance Impact: Significant Deficiency Nonmaterial Noncompliance AL Number(s) and Title(s): 84.007 ? Federal Supplemental Educational Opportunity Grants 84.033 ? Federal Work-Study Program 84.063 ? Federal Pell Grant Program Federal Awarding Agency: U.S. Department of Education Federal Award Number: P007A217153, P007A207153, P033A217153, P033A207153, P063P212776, P063P202776 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: $2,596.97 The College failed to properly calculate returns to Title IV and return funds within the federal timeframe. Finding: According to 34 CFR 668.22, when a Title IV grant recipient withdraws from an institution during a period 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 the total amount of Title IV grant assistance that the student earned is less than the amount of Title IV grant assistance that was disbursed to the student, the difference must be returned to the Title IV programs. 34 CFR 668.22 (j) describes the Timeframe for the Return of Title IV Funds: ?An institution 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... For an institution that is not required to take attendance, an institution must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of (i) Payment period or period of enrollment, (ii) Academic year in which the student withdrew, or (iii) Education program for which the student withdrew.? Twenty-five financial aid recipients who received all ?F?, ?W? or zero quality points were selected for testing. Eighteen of the 25 aid recipients tested were required to have a return to Title IV calculation. Eight of the returns were completed incorrectly which resulted in a 44% error rate. The errors resulted from the College either not calculating the return when the student failed/withdrew all classes prior to the 60% date or from using incorrect institutional charges and/or Title IV amounts. This resulted in known questioned costs of $2,596.97. In addition, seventeen of the calculations required funds to be returned. Twelve errors were noted where the College did not return funds within the 45-day limit which resulted in a 71% error rate. Recommendation The College should perform Title IV refund calculations and return Title IV funds in accordance with Title 34 of the Code of Federal Regulations, Part 668.22. Views of Responsible Officials of the Auditee Management agrees with this finding and will take corrective actions.

Reference Number: 2020-002 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Internal Control and Compliance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance CFDA Number(s) and Title: 84.007 ? Federal Supplemental Educational Opportunity Grants 84.033 ? Federal Work-Study Program 84.063 ? Federal Pell Grant Program Federal Awarding Agency: U. S. Department of Education Federal Award Number: P007A197153, P007A207153, P033A197153, P033A207153, P063P192776, P063P202776 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: None The College did not reconcile the amounts recorded for student Title IV aid reported on the Department of Education systems with amounts recorded for student Title IV aid in the College?s general ledger. Finding Title 34 of the Code of Federal Regulations (CFR) 668 Subpart L ? Financial Responsibility and the Federal Student Aid (FSA) Handbook discuss an institution?s financial responsibility and the required reconciliation process. 34 CFR 668.171(a) states, ?To begin and continue to participate in any title IV, HEA program, an institution must demonstrate to the Secretary that it is financially responsible?? The FSA Handbook states, ?The cash management regulations establish rules and procedures that a school must follow in requesting, managing, and returning FSA program funds. Under the cash management regulations, a school has a fiduciary responsibility to have a system in place to: safeguard FSA funds; ensure FSA funds are used only for the purposes intended; act on the student?s behalf to repay a student?s FSA education loan debt when the school is unable to pay a credit balance directly to the student; and return to the Department any FSA funds that cannot be used as intended.? A key component of the system described is a reconciliation. The U. S. Department of Education has three systems that are involved in the reconciliation process. The Common Origination and Disbursement System (COD) which is the system used for processing, storing, and reconciling certain FSA programs. The G5 System is a grants management system. Among other things, the system is used for awards and payments. Finally, the National Student Loan Data Systems (NSLDS) is the Department?s central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of Education programs. The FSA Handbook states, ?Title IV reconciliation is the process by which a school reviews and compares Title IV aid (grants, loans, and Campus-Based aid) recorded on the Department?s systems (COD, G5, NSLDS) with the information in the school?s internal records. Through reconciliation, disbursement and cash discrepancies are identified and resolved in a timely manner to ensure the school meets all regulatory requirements. Schools must document their reconciliation process and retain any reconciliation documentation for audit and review purposes.? Audit tests revealed the College failed to adequately perform all required reconciliations for the Federal Pell Grant (Pell), Federal Work Study (FWS) and Federal Supplemental Educational Opportunity Grants (SEOG) programs. The Student Financial Aid Office reconciled COD to the FSA module. However, the Business Office failed to reconcile the records to G5 and the general ledger. The lack of reconciliations was due to a high turnover of Business Office employees and the implementation of new accounting software during the 2019-2020 fiscal year. A reconciliation was prepared by ACCS staff during the audit. The reconciliation revealed errors in the general ledger amounts, and the College adjusted the financial statements to correct errors that were identified and supported. However, after adjustments were made, the reconciliation prepared still showed the general ledger understated by $430,362.81 for Pell 19-20 expenditures and overstated by $11,761.01 for SEOG expenditures. At the conclusion of the audit, the College was still unable to determine the reason for the remaining differences. Recommendation The College should design and implement internal controls to ensure that the amounts recorded for student Title IV aid on the Department of Education systems (COD, G5, NSDLS) are reconciled with amounts recorded for student Title IV aid in the College?s general ledger. Views of Responsible Officials of the Auditee Management agrees with this finding and will take corrective actions accordingly.

Reference Number: 2020-003 Compliance Requirement: Reporting Type of Finding: Internal Control and Compliance Internal Control Impact: Significant Deficiency Compliance Impact: 2019-001 (origination) CFDA Number(s) and Title: 84.063 ? Federal Pell Grant Program 84.007 ? Federal Supplemental Educational Opportunity Grants 84.003 ? Federal Work-Study Program Federal Awarding Agency: U. S. Department of Education Federal Award Number: P063P192776, P063P202776, P007A197153, P007A207153, P099A19753, P033A207153 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: None H. Councill Trenholm State Community College did not timely submit four of the forty-four (9.1%) records tested to COD within the 15-day requirement. Finding Federal Register, Volume 84, Number 212 states, "An institution must submit Pell Grant, Iraq and Afghanistan Service Grant, Direct Loan and TEACH Grant disbursement records, as applicable, no later than 15 days after making the disbursement or becoming aware of the need to adjust a student's previously reported disbursement". The Common Origination and Disbursement (COD) System is the federal system through which Federal Pell Grant (Pell Grant), Teacher Education Assistance for College and Higher Education (TEACH) Grant, and William D. Ford Federal Direct Loan (Direct Loan) awards are processed. During the review of Federal Student Aid Pell Grant disbursement records, we tested forty-four COD records for disbursements and adjustments necessary due to activity on these accounts. A sample of twenty-five students was selected. For these twenty-five students, forty-four transactions were reviewed. Four of these transactions were not submitted to COD within the 15- day requirement. The College did not have adequate controls in place to ensure disbursements or adjustments to disbursements were made within the required timeframe. Failure to submit disbursement records within the required timeframe could result in the rejection of all or part of the reported disbursement. Recommendation The College should develop controls to ensure compliance with Federal Grant Program Guidelines and submit student disbursement records within the required timeframe. Views of Responsible Officials of the Auditee Management agrees with this finding and will take corrective actions accordingly.

Finding Federal Register, Volume 83, Number 233 states, "An institution must submit Pell Grant, Iraq and Afghanistan Service Grant, Direct Loan and TEACH Grant disbursement records, as applicable, no later than 15 days after making the disbursement or becoming aware of the need to adjust a student's previously reported disbursement". The Common Origination and Disbursement (COD) System is the federal system through which Federal Pell Grant (Pell Grant), Teacher Education Assistance for College and Higher Education (TEACH) Grant, and William D. Ford Federal Direct Loan (Direct Loan) awards are processed. During the review of Federal Student Aid disbursement records, we tested fifty-one COD records for disbursements and adjustments necessary due to activity on these accounts. The review indicated that sixteen of the fifty-one (31%) COD records were not submitted to COD within the 15 day requirement. Recommendation The College should develop controls to ensure compliance with Federal Register, Volume 83, Number 233 and submit student disbursement records within the required timeframe. Views of Management

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