Carlos Albizu University, Inc.

Federal Program ALN 84.063 Federal Pell Grant Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Disbursements to or on behalf of students Significant deficiency of internal controls over compliance Criteria 34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by crediting a student's account and the total amount of all Title IV, HEA program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but— (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition found During our evaluation of compliance with these requirements, we noted one (1) instance, or one percent (1%) of the eighty (80) of the samples examined, in which the University failed to return the corresponding refund within 14 days time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. Thirty-eight (38) days passed between the date the University identified an FSA credit balance for the student and the actual refund to the student. Finding No. 2025-001 Late Refund Issuance – (continued) Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2025-001 Special Tests - Disbursements to students Student 1 1072401 $ 2,773 $ - $ - $ - $ - $ - Cause The late refund occurred due to a breakdown in follow-up procedures for accounts flagged with exceptions. Specifically, although the University identified the Federal Student Aid (FSA) credit balance, the refund was not issued in a timely manner because the account was not adequately monitored after the initial identification. Effect Failure to issue refunds within the required timeframe may cause financial hardship to students and expose the institution to non-compliance with Title IV regulations, potentially leading to penalties or corrective action from the Department of Education. Questioned cost None. The funds were returned. Context As part of our compliance tests with the disbursement requirements, we selected a sample of sixty (60) students who received a mix of Pell Grant, Direct Loans, Federal Work Study, and campus-based awards (Title IV funds), out of three thousand two hundred ninety-seven (3,297) students who received Title IV funds. From the sample of 60 students, we examined a total of 80 payments of Title IV funds. Our test disclosed one (1) instance out of 80 where the refund was not returned on a timely basis. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2024-002. Recommendation We recommend that the University enhance its follow-up procedures for student accounts where exceptions or anomalies delay the automatic issuance of refunds. Management should require documented case tracking for any account placed on hold and assign responsibility for monitoring such items until resolution. Establishing reminders or automated alerts for pending refunds can help ensure that isolated cases are not overlooked and that all refunds are processed within the 14-day regulatory timeframe. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 53-54.

Institutional Response The institutions agree with the auditor. This was an isolated case of the roster. The institution concurs with the auditor’s finding. We acknowledge the delay in issuing one refund beyond the required 14-day timeframe. Although this was an isolated occurrence, the University is committed to strengthening its internal controls and leveraging technology to prevent recurrence and ensure full compliance with federal regulations. Corrective Action Plan The institution is enhancing automation, monitoring, and accountability to ensure compliance with the 14-day refund requirement. Using Ellucian Colleague’s ODS/Informer, new reports will track Title IV credit balances and flag accounts exceeding 10 days without a refund as a preventive control. These reports will run weekly or more frequently to maintain proactive oversight. A dedicated staff member in the Student Accounts Office will be specifically assigned to process refunds within the required timeframe, ensuring clear accountability and preventing delays. The Finance organizational chart and staff assignment are under review, with the final assignment to be completed by December 1, and the reports are expected to be running by November 3. Anticipated completion date December 1, 2025 Name(s) of the Contact Person(s) Responsible for the Corrective Action Plan Mrs. Ileana Santiago, Controller Dr. Antonio Llorens, CIO

2024-002

Federal Program ALN 84.063 Federal Pell Grant Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Return of Title IV Funds Significant deficiency of internal controls over compliance Criteria Under 34 CFR § 668.22(j), An institution must return the amount of Title IV funds for which it is responsible under paragraph (g) as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. Finding No. 2025-002 Timely Return on Title IV Funds – (continued) Condition found In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or three percent (3%), of the sample selected which included students that received Pell and Direct loans, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2025-002 Special Tests - Timely Return of Title IV Funds Student 1 1072401 $ 396 $ - $ - $ - $ - $ - Cause The late return occurred because the Student Financial Assistance (SFA) office completed the Return of Title IV funds (R2T4) calculation on time, but the withdrawal status was not properly updated in the student information system (Ellucian/ISIS module). The discrepancy arose when the system did not flag the withdrawal as valid due to a course remaining active. This omission prevented the system from generating the cancellation payroll needed to complete the return within the 45-day timeframe. The cause reflects a systemic control gap in reconciling manual withdrawal processing with automated system updates. Effect Failure to return unearned Title IV funds within the required 45-day timeframe can result in potential financial liabilities for the institution, non-compliance penalties, and a negative impact on the institution's participation in federal financial aid programs. Questioned cost None. The funds were returned. Finding No. 2025-002 Timely Return on Title IV Funds – (continued) Context We selected a sample of forty (40) students who withdrew or had a mix of F and withdrew, and noted one (1) sample whose return was not timely reimbursed. The total amount of funds returned late was $396 out of a total of $12,250. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2024-003. Recommendation We recommend that the institution implement enhanced monitoring controls within the financial aid system to ensure that all return of Title IV funds calculations trigger the necessary flags to prompt timely returns of unearned Title IV funds. Additionally, staff should be trained in monitoring these processes to prevent further delays in compliance with federal regulations. The institution should address the deficiencies noted and review all return of Tittle IV funds processes to avoid recurrence and to ensure compliance. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 53-54.

Institutional Response The institution concurs with the auditor’s findings and affirms that this was an isolated occurrence. Due to an administrative error, the affected student enrollment reflected a combination of graduate and undergraduate courses. While the withdrawal process was fully executed for the undergraduate courses, the graduate course remained active in the student information system, preventing the transaction from being recorded as a complete withdrawal. As part of the institution’s internal control and monitoring procedures, the discrepancy was detected and promptly corrected. A Return of Title IV (R2T4) calculation was performed in accordance with federal regulations. The institution remains committed to continuous improvement and regulatory compliance. Additional staff training and process reviews have been implemented to strengthen internal controls and prevent similar occurrences in the future. Corrective Action Plan To strengthen compliance and prevent recurrence, the Miami campus has implemented the Degree Audit functionality in Ellucian Colleague. This enhancement ensures that all course enrollments, term dates, and institutional charges are accurately reflected in the system, allowing the R2T4 process to operate with complete and consistent data. The R2T4 reports are already in place, and staff training, along with improved communication among Student Services and Finance offices, will reinforce timely and accurate processing. Implementation of the Degree Audit at the San Juan campus will follow the completion of a curricular change currently under development by the Academic Department. In the meantime, the San Juan campus continues to apply stricter procedures, such as requiring program director authorization before students enroll in courses outside their academic program. Anticipated completion date Immediately Name(s) of the Contact Person(s) Responsible for the Corrective Action Plan Mrs. Ileana Santiago, Controller Dr. Antonio Llorens, CIO

2024-003

Finding No. 2024-002 Late Refund Issuance Federal Program ALN 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Disbursements to or on behalf of students Significant deficiency of internal controls over compliance Criteria 34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by crediting a student's account and the total amount of all title IV, HEA program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but— (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period Condition found During our evaluation of compliance with these requirements, we noted one (1) instance, or six percent (6%) of the sixty (60) samples selected, in which the University failed to return the corresponding refund within 14 days time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. Forty-one (41) days passed between the date the University identified an FSA credit balance for the student and the actual refund to the student. Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2024-002 Special Tests - Disbursements to students Student 1 1072401 $ - $ - $ - $ 1,793 $ - $ - Cause The Direct Loan posting was processed and posted on 8/15/2023. At the time, the student had an outstanding balance owed to the institution of $2,922. Given this balance, the University initially held the refund of $1,793 instead of applying it to the next term, SP23. Another posting for $2,722 was generated on 8/15/2023, the same day as the Direct Loan posting, which meant that the withheld refund no longer needed to be applied to the SP23 term, but due to it all happening on the same day, it was overlooked. Effect Failure to issue refunds within the required timeframe may cause financial hardship to students and expose the institution to non-compliance with Title IV regulations, potentially leading to penalties or corrective action from the Department of Education. Questioned cost None. The funds were returned. Context As part of our compliance tests with the disbursement requirements, we selected a sample from fifty-one (51) students out two thousand four hundred sixty-five (2,465) who received direct loans. Our test disclosed one (1) instance where the refund was not returned on a timely basis. Identification of a repeat finding This is not a repeat finding. Recommendation We recommend that the institution review its refund processing procedures to ensure timely issuance of credit balance refunds within the 14-day window. Implementing internal controls and automated alerts within the system can help flag accounts for timely refund processing to avoid future delays. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 60-63.

Finding No. 2024-002 Late Refund Issuance Condition Found During our evaluation of compliance with these requirements, we noted one (1) instance, or six percent (6%) of the sample selected, in which the University failed to return the corresponding refund within 14 days’ time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. Forty-one (41) days passed between the date the University identified an FSA credit balance for the student and the actual refund to the student. Corrective Action Plan We will aggressively pursue systems automation alternatives to streamline operations and enforce interdepartmental collaboration to ensure strict compliance with deadlines. Additionally, we will deliver targeted cash management training, with a strong focus on rigorously reviewing and optimizing refund processing procedures. Name(s) of the Contact Person(s) Responsible for Corrective Action Héctor L. Peña, Director of Finance Ramón L. Menéndez, CFO Dr. Antonio Llorens, CIO Anticipated Completion Date Will be completed on or before January 15, 2025.

Finding No. 2024-003 Timely Return on Title IV Funds Federal Program ALN 84.063 Federal Pell Grant Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Return of Title IV Funds Significant deficiency of internal controls over compliance Criteria Under 34 CFR § 668.22(j), An institution must return the amount of title IV funds for which it is responsible under paragraph (g) as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. Condition found In testing compliance with the return of Title IV funds requirement, we noted three (3) cases, or eight percent (8%), of the sample selected which included students that received Pell and Direct loans, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2024-003 Special Tests - Timely Return of Title IV Funds Student 1 1072401 $ 3,698 $ - $ - $ - $ - $ - 2024-003 Special Tests - Timely Return of Title IV Funds Student 2 1072401 $ 3,323 $ - $ - $ - $ - $ - 2024-003 Special Tests - Timely Return of Title IV Funds Student 3 1072401 $ 3,698 $ - $ - $ - $ - $ - Cause The return of tittle IV funds calculation process was conducted and completed on time in the Student Financial Assistance (SFA) office. However, updating the SFA module in Ellucian (school ISIS) was not flagged as valid. This omission meant that the University was unable to generate a cancelation payroll to close the transaction. Effect Failure to return unearned Title IV funds within the required 45-day timeframe can result in potential financial liabilities for the institution, non-compliance penalties, and a negative impact on the institution's participation in federal financial aid programs. Questioned cost None. The funds were returned. Context Three (3) of eleven (11) withdrawal forms from students who received Pell Grants from both campuses reviewed were not timely reimbursed to the Department of Education. The total amount of funds returned late was $5,688 out of a total of $10,512 for the campus of Miami. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend that the institution implement enhanced monitoring controls within the financial aid system to ensure that all return of tittle IV funds calculations trigger the necessary flags to prompt timely returns of unearned Title IV funds. Additionally, staff should be trained in monitoring these processes to prevent further delays in compliance with federal regulations. The institution should address the deficiencies noted and review all return of tittle IV funds processes to avoid recurrence and to ensure compliance. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 60-63.

Finding No. 2024-003 Late R2T4 reimbursement to ED Condition Found In testing compliance with the return of Title IV funds requirement, we noted three (3) cases, or eight percent (8%), of the sample selected, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University. Corrective Action Plan The institution will enhance the total withdrawal process by assigning a dedicated financial aid officer to each campus, responsible for overseeing all funds. This officer will be solely accountable for determining whether a withdrawal is official or unofficial, executing the Return of Title IV (R2T4) process, and coordinating with the fiscal department to ensure timely completion of refunds. As a further safeguard, the Title IV Compliance Coordinator will rigorously monitor the effectiveness of this corrective action plan and ensure ongoing compliance. Name(s) of the Contact Person(s) Responsible for Corrective Action Doris Quero, Senior Financial Aid Director Carmen Rivera Laboy, Title IV Compliance Coordinator Anticipated Completion Date Will be completed on or before January 15, 2025.

Finding No. 2024-004 Delay in Direct Loan Adjustment After Enrollment Cancellation Federal Program ALN 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Category Other matters – N. Special test Return of Title IV Funds Significant deficiency of internal controls over compliance Criteria Per federal regulations (34 CFR § 685.303(b)), when a student’s enrollment status changes, such as through withdrawal or cancellation, any disbursed Title IV aid, including Pell Grants and Direct Loans, must be adjusted and returned to the Department of Education (DE) in a timely manner. Institutions are required to follow Return to Title IV (R2T4) procedures to ensure that funds are correctly adjusted based on the student's enrollment status. Condition found During our eligibility test, we identified a situation in which a student's enrollment was canceled after Pell and Direct Loan funds had already been credited to the student's account. Even though the Pell Grant adjustment and return to common origination disbursement (COD) were completed promptly, the adjustment for the Direct Loan was made after the audit tests disclosed that the loan had not been properly adjusted and returned to the Department of Education, as follows: Finding Number Related Audit Compliance Requirement Student Identifier OPEID Pell Disbursed ($) Pell Underpayment ($) Pell Overpayment ($) Direct Loan Disbursed ($) Direct Loan Underpayment ($) Direct Loan Overpayment ($) 2024-004 Eligibility Tests Student 1 1072400 $ - $ - $ - $ 5,010 $ - $ 5,010 Cause The Pell Grant program’s financial aid officer properly reported the adjustment to the fund on a timely basis. However, the SSFA officer responsible for the adjustment did not execute the corresponding Direct Loan adjustment. Effect The failure to promptly adjust and return Direct Loan funds may result in non-compliance with Title IV regulations. This could lead to potential penalties, the loss of institutional eligibility to participate in Title IV programs, and incorrect reporting to the Department of Education. Questioned cost None. The funds were returned. Context One (1) out of the sixty (60) student ledgers reviewed in the eligibility test indicated that the Direct Loan enrollment cancellation adjustment was not performed in a timely manner. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend that the institution strengthen its internal controls and communication between departments responsible for managing Title IV funds to ensure timely adjustment and return of all federal funds upon changes in student enrollment status. Implementing a formal review process and automating alerts within the financial aid system can help prevent delays in future adjustments and ensure compliance with federal regulations. Views of responsible officials and planned corrective actions The University’s management agrees with this finding. Please refer to the corrective action plan on pages 60-63.

Finding No. 2024-004 Delay in Direct Loan Adjustment After Enrollment Cancellation Condition Found During our eligibility test, we identified a situation in which a student's enrollment was canceled after Pell and Direct Loan funds had already been credited to the student's account. Even though the Pell Grant adjustment and return to COD were completed promptly, the adjustment for the Direct Loan was only made after the auditor discovered that the loan had not been properly adjusted and returned to the Department of Education. Corrective Action Plan We will thoroughly explore system capabilities, and a targeted training session in the Ellucian software will be developed and scheduled to directly address the identified deficiency. All Student Financial Aid Officers will be required to complete this mandatory training. Additionally, comprehensive internal monitoring exercises will be conducted for all R2T4 events to ensure full compliance and process integrity. Name(s) of the Contact Person(s) Responsible for Corrective Action Doris Quero, Senior Financial Aid director Carmen Rivera Laboy, Title IV Compliance Coordinator Eliezer Rodriguez, Ellucian Specialist Anticipated Completion Date Will be completed on or before December 15, 2024.

Criteria The University’s purchasing policy (as amended by Procedimiento de Autorización de Compra de Bienes y Servicios, normative letter No. 2021-04) is created with the purpose of establishing procedures governing the initiation, authorization, and review of all expenditures. To facilitate this process the accounting department developed a checklist that promotes the compliance with this policy. The normative letter No. 2021-04 establishes that the purchases of goods and services continue to be executed through the generation of purchase requisitions in the Webadvisor electronic platform, which also serves as reference to verify the availability of funds before the creation of the purchase requisition. Also, the normative letter No. 2021-04 requires the completion of an authorization form (appendix A form) for the purchase of goods and services that exceed $5,000. The authorization form establishes different levels of approvals that are necessary depending on the amount of the disbursement. Condition found During our audit procedures on internal controls over compliance of federal programs of the University, we tested a sample of seven (7) transactions and noted that one (1) of the transactions did not include the required Appendix A. Cause Management believes this to be an isolated case. The particular transaction involved a renovation of a prior year's contract with a known vendor, previously evaluated, and this led to an oversight in not requiring Annex A. Effect Not having the complete documentation at the time of recording or payment may lead to inadequate recording, duplicity in recording or in payment, or recording invalid transactions. This condition does not allow for a proper and complete examination of the financial activities performed by the Institution. The internal controls established to ensure that the check requests are eligible under the University’s policy and that each invoice or contract is paid only one time were not properly executed. Pertinent information regarding costs, authorizations, obligations, type of expenditures and its allowability, among other requirements, was not properly documented. Questioned cost None Context Of the seven (7) total transactions amounting to $129,114 selected for examination of the federal program “COVID-19-Higher Education Emergency Relief Fund - Institutional Portion”, the required requisition was missing for one (1) transaction, totaling $21,760. Identification of a repeat finding This is not a repeat finding. Recommendation We recommend management to strengthen its quality review controls for disbursements in order to make certain that all documentation required by the University´s policies and procedures are complete and authorized.

Finding No. 2023-003 Deviation from the University’s purchasing policy Condition Found During our audit procedures on internal controls over the compliance of federal programs of the University, we tested a sample of seven (7) transactions and noted that one (1) of the transactions did not include the required Appendix A. Cause Management believes this to be an isolated case. The particular transaction involved a renovation of a prior year's contract with a known vendor, previously evaluated, and this led to an oversight in not requiring Annex A. Corrective Action Plan Management accepts the finding and considers it an isolated case. Appendix A forms are utilized by PO requestors to provide additional information and details of the transaction to the approver. Nonetheless, controls will be enhanced once the implementation of the Ellucian payable module is completely integrated. In addition, we will retrain personnel on the use of Schedule A, by November 3, 2023.

Finding No. 2021-002 Internal Controls Over Expenditures of Federal Awards Federal Program ALN 93.556 Promoting Safe and Stable Families ALN 93.297 Teenage Pregnancy Prevention Program Name of Federal Agency U.S. Department of Health and Human Services Pass-through Entity Promoting Safe and Stable Families ? Passthrough from the Families and Children Administration of the Department of Family of the Commonwealth of Puerto Rico Category Material weakness of internal controls over compliance Criteria As per the Code of Federal Regulations (CFR) ? 200.303 Internal controls, the non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The University?s purchasing policy (as amended by Procedimiento de Autorizacion de Compra de Bienes y Servicios, normative letter No. 2021-04) is created with the purpose of establishing procedures governing the initiation, authorization, and review of all expenditures. To facilitate this process the accounting department developed a checklist that promotes the compliance with this policy. The normative letter No. 2021-04 establishes that the purchases of goods and services continue to be executed through the generation of purchase requisitions in the Webadvisor electronic platform, which also serves as reference to verify the availability of funds before the creation of the purchase requisition. Also, the normative letter No. 2021-04 requires the completion of an authorization form (appendix A form) for the purchase of goods and services that exceed $5,000. The authorization form establishes different levels of approvals that are necessary depending on the amount of the disbursement. Condition found During our examination of the expenses of the projects carried out by Instituto Tercera Mision (the Institute) funded by federal programs `?Promoting Safe and Stable Families - Family First Prevention Act Transition Grant? (Family First) and ?Puerto Rico Optimal System Change (PROSA) for Teenage Pregnancy Prevention Program - Adolescent Health Programs?, we tested a sample of one hundred one (101) purchases and observed the following conditions: ? Six (6) requisitions were not created for six (6) different purchases. They were created after the expense was incurred. ? Thirty-three (33) appendix A forms did not include the date of the signatures which is an element required by the form. ? For one (1) transaction, the required appendix A was not completed. Cause In an effort to promptly start a program initiative, the Institute omitted the pre-established purchasing process. Effect By not following the Institutional Purchasing Policy, the Institute is not complying with the CFR (CFR) ? 200.303 Internal controls. Not having the complete documentation at the time of recognition of an expenditure or when executing a payment may lead to inadequate recording, duplicity in recording or in payment, recording invalid transactions or unauthorized purchases. This deficiency in internal controls precludes management from the proper and complete examination of the financial activities performed by the Institute. The internal controls established to ensure that the check requests are eligible under the University?s policy and that each invoice or contract is paid only one time were not properly executed. Pertinent information regarding costs, authorizations, obligations, type of expenditures and its allowability, among other requirements, was not properly documented. Also, by not having the date of the signature available, we could not determine if the form was properly completed as required. Context For the Family First program, we examined forty-one (41) purchases amounting to $246,783 out of a total population of nine hundred thirty-one (931) items amounting to a total of $2,220,418. For the PROSA program, we examined sixty (60) purchases amounting to $174,615 out of a total population of three hundred forty-one (341) items amounting to a total of $870,647. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2020-001. Recommendation Management of the University, along with the management of the Institute, must assure that all disbursements include all the required documentation in accordance with the University?s policy prior to executing and paying the purchases. Override of the pre-established internal controls may lead to fraudulent purchases, misstatements on the financial statements and/or unallowable costs incurred by the federal program. Views of responsible officials and planned corrective actions The University?s management agrees with this finding. Please refer to the corrective action plan on pages 73-82.

Finding No. 2021-002 Internal Controls Over Expenditures of Federal Awards Condition found: During our examination of the expenses of the projects carried out by Instituto Tercera Mision (the Institute) funded by federal programs `?Promoting Safe and Stable Families - Family First Prevention Act Transition Grant? (Family First) and ?Puerto Rico Optimal System Change (PROSA) for Teenage Pregnancy Prevention Program - Adolescent Health Programs?, we tested a sample of one hundred one (101) purchases and observed the following conditions: ? Six (6) requisitions were not created for six (6) different purchases. They were created after the expense was incurred. ? Thirty-three (33) appendix A forms did not include the date of the signatures which is an element required by the form. ? For one (1) transaction, the required appendix A was not completed. Institution Response: The management of Third Mission Institute will ensure that all disbursements include all the documentation, date, and signatures required in accordance with the University's policy before executing and paying for purchases. Corrective Action Plan: To meet the growth in business volume experienced by the Institute, the accounts payable functions have been segregated. These tasks were carried out by the Administration and Finance Associate of the Institute. The Institute created a new position for Administrative Support-Accounts Payable under the supervision of its Accounting unit on August 2021. In addition, the Institute management will re-train the personnel to ensure that all disbursements include the required documentation. Name (s) of the Contact Person (s) Responsible for Corrective Action: The Institute Executive Committee: Mrs. Marizaida Sanchez Cesareo, Mr. Hector Colon and Mrs. Idalie Hernandez Gierbolini. Anticipated Completion Date: January 2022

2020-001

Finding No. 2021- 003 Special Tests and Provisions ? Disbursements to or on Behalf of Students Federal Program ALN 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Significant deficiency of internal controls over compliance Compliance Requirements Special tests and provisions ? Disbursements to or on behalf of Students Criteria 34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by crediting a student's account and the total amount of all title IV, HEA program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but-- (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period 34 CFR 668.164 (d) (2) (i&ii) states that an institution issues a check on the date that it ? (i) Mail the check to the student or parent; or (ii) Notifies the student or parent that the check is available for immediate pick-up at a specified location at the institution. The institution may hold the check for no longer than 21 days after the date it notifies the student or parent. If the student or parent does not pick up the check, the institution must immediately mail the check to the student or parent, pay the student or parent directly by other means, or return the funds to the appropriate title IV, HEA program. Condition Found During our evaluation of compliance with these requirements, we noted one (1) instance, or two percent (2%) of the sample selected, in which the University failed to return the corresponding refund within 14 days? time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. A total of twenty-two (22) days elapsed from the date the University determined that the student had a FSA credit balance. Cause This condition was due to the miscommunication from a student to provide the correct bank account number in which the credit balance would be deposited and an administrative delay from the collections office personnel of the San Juan campus after receiving the correct bank account number. In the period when the credit balance took place, the University was under lockdown due to the COVID ? 19 pandemic and thus, students were taking virtual classes and employees were working from a remote location. Various attempts in contacting the student were made. However, the student communicated back with the University two days before the 14 days? time frame due date. Effect As a result of this condition, the USDE may issue warnings and/or impose penalties to the University. Questioned Cost None. Context In testing compliance with the requirements for disbursements under the Federal Direct Student Loan Program, we examined forty-eight (48) participants, from a total population of two thousand four hundred three (2,403) students, who received Federal Direct Loans for the audit period and found one (1) instance of noncompliance. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2021: SEE SCHEDULE OF FINDINGS AND QUESTIIONED COSTS FOR TABLE Identification of a repeat finding This is not a repeat finding Views of responsible officials and planned corrective actions Management of the University agrees with this finding. Please refer to the corrective action plan on pages 73- 82. Recommendation The University must reinforce its procedures to ascertain that all FSA disbursement of credit balances to students comply with time frame criteria for refunds. Management also should review how is the process currently undertaken to identify and eliminate any inefficiencies and to adapt other steps necessary to improve the overall process. A log of pending disbursements with their respective due date should be kept and properly monitored to reduce the risk of non-compliance due to errors or administrative delays.

Finding No. 2021- 003 Special Tests and Provisions ? Disbursements to or on Behalf of Students Condition found: During our evaluation of compliance with these requirements, we noted one (1) instance, or two percent (2%) of the sample selected, in which the University failed to return the corresponding refund within 14 days? time frame from the date the University determined that the student had a Federal Student Aid (FSA) credit balance. A total of twenty-two (22) days elapsed from the date the University determined that the student had a FSA credit balance. Institution Response: The institution accepts the finding, however, it is necessary to stress that this is an isolated case directly related to the National Declared Emergency. This event occurred during a period of lockdown due to COVID-19 that precluded the Campus from contacting the student to get bank account information. After multiple attempts, the Campus finally were able to contact the student and get the correct information and initiated the EFT process. Our auditors became aware of the challenges related to this event and included comments to this effect under the Cause section. Corrective Action Plan: The University will continue its internal monitoring audit process through the Institutional Compliance Officer. A re-training process has been provided to the Bursar?s Office to strengthen the Cash Management disbursement process and to develop alternate processing under extremely unusual circumstances. Name (s) of the Contact Person (s) Responsible for Corrective Action: Mr. Hector Pe?a, Finance Director for the San Juan Campus Anticipated Completion Date: January 2022

Finding No. 2020-003 Special Tests and Provisions ? Enrollment Reporting Federal Program Students Financial Assistance Programs Cluster CFDA 84.063 Federal Pell Grant Program CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special tests and provisions ? Enrollment Reporting Criteria The National Student Loan Data System (NSLDS) is the U.S. Department of Education?s (USDE) central database for federal student aid disbursed under Title IV of the Higher Education Act of 1965 (HEA), as amended. Among other things, NSLDS monitors the programs of attendance and the enrollment status of Title IV aid recipients. The institution determines how often it receives the Enrollment reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website, as stated in 34 CFR Section 674.19 for Federal Perkin Loans, 34 CFR 690.83 (b)(2) for Federal Pell Grant Program and 34 CFR section 685.309 for Federal Direct Student Loan Program. A student?s enrollment status determines eligibility for in-school status, deferment, and grace periods, as well as for the payment of interest subsidies to Federal Direct Student Loan Program loan holders by USDE. Enrollment reporting in a timely and accurate manner is critical for effective management of the programs.Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Condition Found As part of our testing of forty (40) students who graduated and/or withdrew during 2020, we noted the following instances of non-compliance; four (4) students for which the University did not report to the National Student Loan Data System (NSLDS) the student status change within the required 60 days? period and; two (2) students, among the four (4) not reported within the required 60 days, for which the University did not report accurately the student status change to the NSLDS. Cause The condition was mainly due to an administrative error in the monitoring of the information to be reported to the NSLDS. Effect As a result of this condition, the USDE was prevented the use of accurate reporting data, which is critical for the effective administration of the Federal Direct Student Loan Program, the Federal Pell Grant Program and for USDE budgetary policy analysis. It also may result in administrative sanctions by the grantor. Questioned Cost None. Context Of the 600 cases of status changes for 2020, we selected forty (40) students for testing and noted six (6) instances of non-compliance in relation to four (4) students, or 10% of the sample selected, in which the University did not comply with the enrollment reporting requirements. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2019-006. Views of responsible officials and planned corrective actions The University?s management agrees with this finding. Please refer to the corrective action plan on pages 65-69. Recommendation The University must ascertain that students? documentation and other information necessary to comply with the federal funds enrollment reporting requirements are readily available and up to date, and that all personnel assigned to such processes has the necessary knowledge and experience to ensure full compliance with the applicable regulations. Management should also review how is the process currently undertaken to identify and eliminate any inefficiencies and to adapt other steps necessary to improve the overall enrollment reporting process.

Finding No. 2020-003 Special Tests and Provisions ? Enrollment Reporting Condition: As part of our testing of forty (40) students who graduated and/or withdrew during 2020, we noted the following instances of non-compliance; four (4) students for which the University did not report to the National Student Loan Data System (NSLDS) the student status change within the required 60 days? period and; two (2) students, among the four (4) not reported within the required 60 days, for which the University did not report accurately the student status change to the NSLDS. Institution Response: The University agrees with the auditor on this finding, however is important to notice that the cause for this issue on students No. 17 and No. 24, was due to the use of an incorrect program length and the system did not allowed the transmission of the updated information. The University upon becoming aware of this issue proceeded to correct the program length for the students and was able to transmit the enrollment data for the students successfully. There were two (2) students (Students No. 13 and No. 14) for whom the University incorrectly reported the withdrawal dates. Those student?s data were reprocessed and reported correctly at the moment the school became aware of the issue. Corrective Action Plan: With the assistance of the Information Technology Department, the University has revised all setups for academic programs included in the Enrollment Report processing and proceeded to delete any incorrect information in the database of the programs for this report. The University will revise quarterly the information of the programs included in the Enrollment Report including the program length to minimize any recurrence of this finding. Also, the University has proceeded to provide training to the Registrar Office in the procedure to identify the correct withdrawal date and the way this date is reflected in the Enrollment Status Report.

2019-006

Finding No. 2020-004 Special Tests and Provisions ? Timely Return on Title IV Funds Federal Program Students Financial Assistance Programs Cluster CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special Tests and Provisions ? Timely Return on Title IV Funds Criteria 34 CFR Section 668.22(a) states that: when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of the Title IV grant or loan assistance that the student earned as of the student?s withdrawal date in accordance with paragraph (e) of such section. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution?s determination that the student withdrew, the difference must be returned to the Title IV programs. Also, 34 CFR Section 668.173 (b) states that: an institution returns unearned Title IV, HEA program funds timely if; (i) the institution deposits or transfers the fund into the bank account it maintains under Section 668.163 no later than 45 days after the date it determines that the student withdrew; (ii) the institution initiates an electronic funds transfer (EFT) no later than 45 days after the date it determines that the students withdrew; (iii) the institution initiates an electronic transaction, no later than 45 days after the date it determines that the student withdrew, that informs a FFEL lender to adjust the borrower?s loan account for the amount returned; or (iv) the institution issues check no later than 45 days after the date it determines that the student withdrew. Returns by check are late if the check is issued more than 45 days after the institution determined the student withdrew or the date on the canceled check shows the check was endorsed more than 60 days after the date the institution determined that the student withdrew. Finally, 34 CFR Section 668.22(j)(2) states that: 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 the: (i) Payment period or period of enrollment, as appropriate, in accordance with paragraph (e)(5) of this section; (ii) Academic year in which the student withdrew; or(iii) Educational program from which the student withdrew. Condition Found In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or four percent (4%), of the sample selected, in which the University failed to determine the withdrawal date no later than 30 days after the end of period of enrollment, and subsequently failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR TABLE Cause The exception noted was a student that withdrew without providing notification to the University. Ineffective monitoring controls caused the University to fail in determining the withdrawal date no later than 30 days after the end of period of enrollment and to subsequently fail to return the total corresponding refund within 45 days. Effect Although the University subsequently corrected this error, the related Title IV funds were returned to the lender after the required 45-day period. Such late return may be considered by the grantor as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions. Questioned Cost None. Context Of the one hundred forty one (141) cases of students who withdrew, dropped-out, or failed to attend to the University, we examined twenty-five (25) cases of students who withdrew or dropped out; and ten (10) cases of students that failed to attend, and noted one (1) instance of non-compliance. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2020: SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR TABLE Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2019-007. Views of responsible officials and planned corrective actions Please refer to the corrective action plan on pages 65-69. Recommendation The University should improve its process and procedures to ensure that the registrar officers enter the correct withdrawal dates.

Finding No. 2020-004 Special Tests and Provisions ? Timely Return on Title IV Funds Condition: In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or four percent (4%), of the sample selected, failed to determine the withdrawal date no later than 30 days after the end of period of enrollment and subsequently failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University. Institution Response: This is an isolated case. This withdrawal student was enrolled in our Mayaguez location. That particular location was severely affected by natural disasters of earthquakes, a pandemic lockdown, and tropical storm floods, during the spring to summer terms. These events have a direct impact on the capacity of our employees and students to perform our normal operations, especially when some of these earthquakes happened while being personally attending our location. The Mayaguez area was declared as a location designated as a disaster area by the Federal Government. Each one of the processes of this withdrawal was delayed in being process due to uncontrollable events that affected the University?s regular processing by the staff. Corrective Action Plan: The University will continue its internal monitoring process to assess the time to calculate the student withdrawals. A re-training process has been provided to the Registrar and Financial Aid Officers to strengthen the withdrawal process and to develop alternate processing to monitor withdrawals under extremely unusual circumstances.

2019-007

Federal Program Students Financial Assistance Programs Cluster CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special tests and provisions ? Disbursements to or on Behalf of Students 34 CFR Section 668.165 (a) states that: Before an institution disburses Title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loans or FFEL Program funds, the notice must indicate which funds are from subsidized loans and which are from unsubsidized loans. Except in the case of a post-withdrawal disbursement made in accordance with 34 CFR Section 668.22(a)(5), if an institution credits a student's account at the institution with Direct Loans, FFEL, Federal Perkins Loan, or Teacher Education Assistance for College and Higher Education Grants (TEACH) Grant Program funds, the institution must notify the student or parent of: ? The anticipated date and amount of the disbursement; ? The student's right or parent's right to cancel all or a portion of the Direct Loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds returned to the holder of that loan, the TEACH Grant proceeds returned to the Secretary. However, if the institution releases a check provided by a lender under the FFEL Program, the institution is not required to provide this information; and ? The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the Direct Loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement. Condition Found In testing compliance with the requirements for disbursements under the Federal Direct Student Loan program (Direct Loans), we selected fifty-two (52) participants from a total population of two thousand three hundred eighteen (2,318) students who received Direct Loans, and examined the related disbursements notifications for a selected term. During our evaluation of compliance with these requirements, we noted five (5) instances, or ten percent (10%) of the sample selected, in which the University failed to properly include all the required information on the loan disbursement notifications. Cause The condition was caused by a modification made to the notification letter in which part of the required notifications to the students was omitted. The University detected the failure on September 2019 and proceeded to corrected it for notifications sent on and after January 2020. Of the five (5) exceptions noted, all were for the term that of fall 2019. Effect Failure to make the required notifications may be considered by the grantor as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions by the grantor. In addition, as a result of the condition, the student or parent was prevented of all the required and pertinent information about the loan disbursement necessary to reach an informed decision. Questioned Cost None. Context Of the fifty-two (52) notifications examined, five (5) notifications did not have the date and amount of the disbursement, lacked the phrase ?have the loan proceeds returned to the holder? on the notification and did not have the time by which the student or parent must notify their wish to cancel the loan. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2020: SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR TABLE Identification of a repeat finding This is a repeat finding for the immediate previous audit, Finding No. 2019-009. Views of responsible officials and planned corrective actions Management of the University agrees with this finding. Please refer to the corrective action plan on pages 65-69. Recommendation Since this non-compliance event was corrected on January 2020, the University must continue its effort to maintain internal controls to prevent and detect these types of deviations. The University must keep reviewing how the process is currently undertaken to identify and eliminate any inefficiencies and to adopt other steps necessary to improve the overall process.

Finding No. 2019-005 Special Tests and Provisions ? Disbursements to or on behalf of Students under the Federal Direct Student Loan Program - Notifications Condition: In testing compliance with the requirements for disbursements under the Federal Direct Student Loan program (Direct Loans), we selected fifty-two (52) participants from a total population of two thousand three hundred eighteen (2,324) students who received Direct Loans, and examined the related disbursements notifications for a selected term. During our evaluation of compliance with these requirements, we noted five (5) instances, or ten percent (10%) of the sample selected, in which the University failed to properly include all the required information on the loan disbursement notifications. Institution Response: This was a completely unusual event since all systems and prior notification were in compliance with all elements of notification. Unfortunately, during fall 2019, the University experienced a period where the communication was incorrectly produced with insufficient disclosure data. The University upon becoming aware of this event proceeded to correct the communication and to include all elements of information required. The University continues to monitor this process and in in Spring 2020 conducted a review validating that all communications were completed in content and information. Corrective Action Plan: The University has proceeded to establish a procedure where at the beginning of each term the disclosure notification regarding the Federal Direct Student Loans (DL) disbursements is revised to corroborate that all information is included in the DL disbursement communication.

2019-009

Finding No. 2019-006 Special Tests and Provisions ? Enrollment Reporting Federal Program Students Financial Assistance Programs Cluster CFDA 84.063 Federal Pell Grant Program CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special tests and provisions ? Enrollment Reporting Criteria The National Student Loan Data System (NSLDS) is the U.S. Department of Education?s (USDE) central database for federal student aid disbursed under Title IV of the Higher Education Act of 1965 (HEA), as amended. Among other things, NSLDS monitors the programs of attendance and the enrollment status of Title IV aid recipients. The institution determines how often it receives the Enrollment reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website, as stated in 34 CFR Section 674.19 for Federal Perkin Loans, 34 CFR 690.83 (b)(2) for Federal Pell Grant Program and 34 CFR section 685.309 for Federal Direct Student Loan Program. A student?s enrollment status determines eligibility for in-school status, deferment, and grace periods, as well as for the payment of interest subsidies to Federal Direct Student Loan Program loan holders by USDE. Enrollment reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Condition Found As part of our testing of 40 students who graduated and/or withdrew during 2019, we noted the following instances of non-compliance; one (1) student for which the University did not report to the National Student Loan Data System (NSLDS) the student status change within the required 60 days? period and; one (1) student for which the University did not report the student status change to the NSLDS. Cause The condition was mainly due to an administrative error in the monitoring of the information to be reported to the NSLDS. Effect As a result of this condition, the USDE was prevented the use of accurate reporting data, which is critical for the effective administration of the Federal Direct Student Loan Program, the Federal Pell Grant Program and for USDE budgetary policy analysis. It also may result in administrative sanctions by the grantor. Questioned Cost None. Context Of the 473 cases of status changes for 2019, we selected forty (40) students for testing and noted two (2) instances, or 5% of the sample selected, in which the University did not comply with the enrollment reporting requirements. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2018-001. Views of responsible officials and planned corrective actions The University?s management agrees with this finding. Please refer to the corrective action plan on pages 62-68. Recommendation The University must ascertain that students? documentation and other information necessary to comply with the federal funds enrollment reporting requirements are readily available and up to date, and that all personnel assigned to such processes has the necessary knowledge and experience to ensure full compliance with the applicable regulations. Management should also review how is the process currently undertaken to identify and eliminate any inefficiencies and to adapt other steps necessary to improve the overall enrollment reporting process.

Finding No. 2019-006 Special Tests and Provisions ? Enrollment Reporting Condition: As part of our testing of 40 students who graduated and/or withdrew during 2019, we noted the following instances of non-compliance; one (1) student for which the University did not report to the National Student Loan Data System (NSLDS) the student status change within the required 60 days? period and; one (1) student for which the University did not report the student status change to the NSLDS. Institution Response: The University accepts the finding. The reason for one of the findings is attributed to the fact that the school indeed reported the student status on time; however, the withdrawal date use was incorrect. The school has become aware of this issue and has identified the causes and developed an action plan to improve the compliance in reporting and receiving the accurate withdrawal date The second instance was a case that, due to the nature of its enrollment status, the institution business solution did not identify correctly the student academic load. Corrective Action Plan: To correct the first of the issues the University has proceeded to provide training to the Registrar Office personnel in the procedure to identify the correct withdrawal date and the way this date is reflected in the Enrollment Status Report. For the second issue, the Registrar Office has been instructed to review all cases in the Warning Report from the National Student Clearinghouse (NSC) and to establish if there are any cases needed to be modified in the Enrollment Report. The Institutional Title IV Compliance Office will receive a certification by the Registrar that the Enrollment Report Warning was internally audited to correct any discrepancies between the institution business solution and the Enrollment Report.

2018-001

Finding No. 2019-007 Special Tests and Provisions ? Timely Return on Title IV Funds Federal Program Students Financial Assistance Programs Cluster CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special Tests and Provisions ? Timely Return on Title IV Funds Part III - Findings and Questioned Costs Relating to Federal Awards ? (continued) Finding No. 2019-007 Special Tests and Provisions ? Timely Return on Title IV Funds? (continued) Criteria 34 CFR Section 668.22(a) states that: when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of the Title IV grant or loan assistance that the student earned as of the student?s withdrawal date in accordance with paragraph (e) of such section. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution?s determination that the student withdrew, the difference must be returned to the Title IV programs. Also, 34 CFR Section 668.173 (b) states that: an institution returns unearned Title IV, HEA program funds timely if; (i) the institution deposits or transfers the fund into the bank account it maintains under Section 668.163 no later than 45 days after the date it determines that the student withdrew; (ii) the institution initiates an electronic funds transfer (EFT) no later than 45 days after the date it determines that the students withdrew; (iii) the institution initiates an electronic transaction, no later than 45 days after the date it determines that the student withdrew, that informs a FFEL lender to adjust the borrower?s loan account for the amount returned; or (iv) the institution issues check no later than 45 days after the date it determines that the student withdrew. Returns by check are late if the check is issued more than 45 days after the institution determined the student withdrew or the date on the canceled check shows the check was endorsed more than 60 days after the date the institution determined that the student withdrew. Condition Found In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or four percent (4%), of the sample selected, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: See Schedule of Findings and Questioned Costs for Table Cause The withdrawal date used by the University was not the actual date when the withdrawal process began. Effect Although the University subsequently corrected this error, the related Title IV funds were returned to the lender after the required 45-day period. Such late return may be considered by the grantor as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions. Questioned Cost None. Context Of the two hundred eight (208) cases of students who withdrew, dropped-out, or failed to attend to the University, we examined twenty-five (25) cases and determined that one (1) case did not comply with the timely return of funds requirements. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2019: See Schedule of Findings and Questioned Costs for Table Identification of a repeat finding This is not a repeat finding. Views of responsible officials and planned corrective actions Please refer to the corrective action plan on pages 62-68. Recommendation The University should improve its process and procedures to ensure that the registrar officers enter the correct withdrawal dates.

Finding No. 2019-007 Special Tests and Provisions ? Timely Return on Title IV Funds Condition: In testing compliance with the return of Title IV funds requirement, we noted one (1) case, or four percent (4%), of the sample selected, in which the University failed to return the total corresponding refund within 45 days from the date the University determined that the student withdrew, dropped-out, or failed to attend to the University, as follows: See Corrective Action Plan for Table Institutional Response: The University expressed that this finding is a miscalculation as a result of the use of incorrect withdrawal date. A first withdrawal calculation was processed, and funds returned as established on the return of Title IV funds regulations. As an institutional procedure, we performed an internal audit for the said period and identified that this was the only case that needed to be corrected. This is an isolated case and does not reflect the standard procedure of the University, however, if, in the course of our internal check and balance process the University identifies any error it will proceed and continue to correct and amend any incorrect calculation immediately Corrective Action Plan: The institution will continue its internal monitoring process to assess the data provided to calculate the student withdrawals. A re-training process has been provided to the Registrar and Financial Aid Officers to strength the withdrawal process and to continue the internal monitoring process at the University for Title IV Compliance.

Finding No. 2019-008 Special Tests and Provisions ? Disbursements to or on Behalf of Students Federal Program Students Financial Assistance Programs Cluster CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special tests and provisions ? Disbursements to or on Behalf of Students Criteria 34 CFR Section 668.22(a) states that: Whenever an institution disburses Title IV, HEA program funds by crediting a student's account and the total amount of all Title IV, HEA program funds credited exceeds the amount of tuition and fees, room and board, and other authorized charges the institution assessed the student, the institution must pay the resulting credit balance directly to the student or parent as soon as possible but? (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period 34 CFR 668.164 (d) (2) (i&ii) states that an institution issues a check on the date that it ? (i) Mail the check to the student or parent; or (ii) Notifies the student or parent that the check is available for immediate pick-up at a specified location at the institution. The institution may hold the check for no longer than 21 days after the date it notifies the student or parent. If the student or parent does not pick up the check, the institution must immediately mail the check to the student or parent, pay the student or parent directly by other means, or return the funds to the appropriate Title IV, HEA program. Condition Found During our evaluation of compliance with these requirements, we noted one (1) instance, or two percent (2%) of the sample selected, in which the University failed to return the corresponding refund within the 14 days time frame from the date the University determined that the student had a Federal Student Aid credit balance, as follows: See Schedule of Findings and Questioned Costs for Table Cause This condition was mainly due to an administrative human error. Effect As a result of this condition, the USDE may issue warnings, sanctions and/or impose penalties to the University. Questioned Cost None. Context In testing compliance with the requirements for disbursements under the Federal Direct Student Loan Program, we selected fifty-six (56) participants, from a total population of two thousand one hundred sixty-eight (2,168) students, who received Federal Direct Loans for the audit period and found one (1) instance of noncompliance. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2019: See Schedule of Findings and Questioned Costs for Table Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2018 - 002. Views of responsible officials and planned corrective actions Management of the University agrees with this finding. Please refer to the corrective action plan on pages 62-68. Recommendation The University must reinforce its procedures to ascertain that all FSA disbursement of credit balances to students comply with time frame criteria for refunds. Management also should review how is the process currently undertaken to identify and eliminate any inefficiencies and to adapt other steps necessary to improve the overall process.

Finding No. 2019-008 Special Tests and Provisions ? Disbursements to or on Behalf of Students Condition: During our evaluation of compliance with these requirements, we noted one (1) instance, or two percent (2%) of the sample selected, in which the University failed to return the corresponding refund within the 14 days time frame from the date the University determined that the student had a Federal Student Aid credit balance, as follows: See Corrective Action Plan for Table Institution Response: This is an isolated case and the student took possession of its check on day 15 after a credit balance was reflected in the student ledger. The evidence the institution has on record of the disbursement of this refund is the student signature on the voucher check with a date corresponding to the 15th day after the refund was issued. The University has recognized that in this case, the University failed to demonstrate that the it notified the student of the availability of the check within established 14 days. Corrective Action Plan: The University has proceeded to review the refund notification process to the students to comply with regulations. The institution has adopted a two steps procedure to manage students refund checks, that provide evidence of the issue date required by the US Department of Education. 1. The first step is where the Finance Office sends emails to corresponding students to notify of the availability of the checks at the University?s Finance Office and the working hours to pick up the checks. This communication will also provide a cutoff date to hold the checks in the office before mailing the checks. 2. The second step is to mail the checks through US Post Office where they will be stamped using the service "Firm Mailing Book for Accountable Mail" available through US Post Office. This service will serve as evidence of the date mailed. The institution will monitor the enforcement of this procedure and will conduct a periodical review of the execution of the process.

2018-002

Finding No. 2019-009 Special Tests and Provisions ? Disbursements to or on Behalf of Students under the Federal Direct Student Loan Program - Notifications Federal Program Students Financial Assistance Programs Cluster CFDA 84.007 Federal Supplemental Educational Opportunity Grants CFDA 84.063 Federal Pell Grant Program CFDA 84.268 Federal Direct Student Loans Program Name of Federal Agency U.S. Department of Education Pass-through Entity N/A Category Compliance/Internal Control Compliance Requirements Special tests and provisions ? Disbursements to or on Behalf of Students 34 CFR Section 668.165 (a) states that: Before an institution disburses Title IV, HEA program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loans or FFEL Program funds, the notice must indicate which funds are from subsidized loans and which are from unsubsidized loans. Except in the case of a post-withdrawal disbursement made in accordance with 34 CFR Section 668.22(a)(5), if an institution credits a student's account at the institution with Direct Loans, FFEL, Federal Perkins Loan, or Teacher Education Assistance for College and Higher Education Grants (TEACH) Grant Program funds, the institution must notify the student or parent of: ? The anticipated date and amount of the disbursement; ? The student's right or parent's right to cancel all or a portion of the Direct Loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds returned to the holder of that loan, the TEACH Grant proceeds returned to the Secretary. However, if the institution releases a check provided by a lender under the FFEL Program, the institution is not required to provide this information; and ? The procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the Direct Loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement. Condition Found In testing compliance with the requirements for disbursements under the Federal Direct Student Loan program (Direct Loans), we selected fifty-six (56) participants from a total population of two thousand one hundred sixty-eight (2,168) students who received Direct Loans, and examined the related disbursements notifications for a selected term. During our evaluation of compliance with these requirements, we noted fifty-six (56) instances, or one hundred (100%) of the sample selected, in which the University failed to properly include all the required information on the loan disbursement notifications. Cause The condition was caused by a modification made to the notification letter in which part of the required notifications to the students was omitted. Effect Failure to make the required notifications may be considered by the grantor as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions by the grantor. In addition, as a result of the condition, the student or parent was prevented of all the required and pertinent information about the loan disbursement necessary to reach an informed decision. Questioned Cost None. Context Of the fifty-six (56) notifications examined, sixteen (16) notifications did not have the date and amount of the disbursement, fifty-six (56) lacked the phrase ?have the loan proceeds returned to the holder? on the notification and sixteen (16) notifications did not have the time by which the student or parent must notify their wish to cancel the loan. Following is a description of each sample and the population from which the samples were drawn for students that received Direct Loans funds for the year ended June 30, 2019: See Schedule of Findings and Questioned Costs for Table Identification of a repeat finding This is a repeat finding for the immediate previous audit, Finding No. 2018-003. Views of responsible officials and planned corrective actions Management of the University agrees with this finding. Please refer to the corrective action plan on pages 62-68 Recommendation The University should modify disbursement loans notifications and include all the information required by USDE regulations. Also, management should review how the process is currently undertaken to identify and eliminate any inefficiencies and to adopt other steps necessary to improve the overall process.

Finding No. 2019-009 Special Tests and Provisions ? Disbursements to or on Behalf of Students under the Federal Direct Student Loan Program - Notifications Condition: In testing compliance with the requirements for disbursements under the Federal Direct Student Loan program (Direct Loans), we selected fifty-six (56) participants from a total population of two thousand one hundred sixty-eight (2,168) students who received Direct Loans and examined the related disbursements notifications for a selected term. During our evaluation of compliance with these requirements, we noted fifty-six (56) instances, or one hundred (100%) of the sample selected, in which the University failed to properly include all the required information on the loan disbursement notifications. Institution Response: The institution accepts this finding and wishes to express that the students indeed were notified on time of the information required, however, the notification was deficient in the content and did not include all required elements. Corrective Action Plan: The institution has proceeded to amend such notification and has included all required notification elements. The Compliance Officer will conduct periodical review during 2019 / 2020 Award Year to confirm that the Direct Loans notification to the student complies with all the required elements as established in the Title IV regulations.

2018-003

GSA_MIGRATION

GSA_MIGRATION

2017-001

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

2016-002

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

2015-001

GSA_MIGRATION

GSA_MIGRATION