Arkansas Baptist College

Audit Finding Reference Number Questioned Cost 2023 - 002 - Return of Title IV Funds $22,473 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (3) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. ABC is a college that is not required to take attendance. Thus, ABC must determine the student’s withdrawal date as either (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student’s control, the date the institution determines is related to that circumstances, (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Conditions and Contexts During my audit, I noted the following: • ABC did not return the required Title IV funds for one (1) student out of three (3) tested. The amount required to be returned totaled $3,446, was not returned; • ABC did not return the required Title IV funds within the prescribed timeframe for one (1) student out of three (3) tested; and • ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students’ enrolled courses and received all non-passing grades for five (5) of the eight (8) students selected for testing resulting in $19,028 to be returned by ABC. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $22,473 as follows: Program Amount Federal PELL Grant $ 12,977 Federal Direct Loan 9,496 Total $ 22,473 Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-002. Recommendation I recommend that management immediately make the necessary determination as to whether the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner. Management's Response Management concurs with this finding. The College will keep accurate attendance and participation records. The College will calculate R2T4s accurately and will return the funds in a timely manner. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to R2T4 regulations. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will keep accurate attendance and participation records. The College will calculate R2T4s accurately and will return the funds in a timely manner. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to R2T4 regulations. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-002

Audit Finding Reference Number Questioned Cost 2023 - 002 - Return of Title IV Funds $22,473 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (3) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. ABC is a college that is not required to take attendance. Thus, ABC must determine the student’s withdrawal date as either (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student’s control, the date the institution determines is related to that circumstances, (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Conditions and Contexts During my audit, I noted the following: • ABC did not return the required Title IV funds for one (1) student out of three (3) tested. The amount required to be returned totaled $3,446, was not returned; • ABC did not return the required Title IV funds within the prescribed timeframe for one (1) student out of three (3) tested; and • ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students’ enrolled courses and received all non-passing grades for five (5) of the eight (8) students selected for testing resulting in $19,028 to be returned by ABC. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $22,473 as follows: Program Amount Federal PELL Grant $ 12,977 Federal Direct Loan 9,496 Total $ 22,473 Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-002. Recommendation I recommend that management immediately make the necessary determination as to whether the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner. Management's Response Management concurs with this finding. The College will keep accurate attendance and participation records. The College will calculate R2T4s accurately and will return the funds in a timely manner. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to R2T4 regulations. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will keep accurate attendance and participation records. The College will calculate R2T4s accurately and will return the funds in a timely manner. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to R2T4 regulations. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-002

Audit Finding Reference Number 2023 - 003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: • The PELL amount was disbursed in the COD system did not agree to the students’ billing statements for four (4) students out of eighty-eight (88). The billing statements under reported $1.587; • The Direct loan amounts disbursed in the COD system did not agree to the students’ billing statements for three (3) students out of seventy-one (71) tested. The billing statements under reported $3,316; and • The enrollment date was incorrectly reported in COD for seventy-five (75) students out of ninety-three (93) tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording to the COD system.   Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-003. Recommendation I recommend that ABC implements controls to ensure that information reported to the COD system is accurate. Management's Response Management concurs with this finding. The College will ensure the accuracy of the data that is input into the COD system and the College will work to apply funds appropriately to students' accounts. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to managing the COD system. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will ensure the accuracy of the data that is input into the COD system and the College will work to apply funds appropriately to students' accounts. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to managing the COD system. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-003

Audit Finding Reference Number 2023 - 003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: • The PELL amount was disbursed in the COD system did not agree to the students’ billing statements for four (4) students out of eighty-eight (88). The billing statements under reported $1.587; • The Direct loan amounts disbursed in the COD system did not agree to the students’ billing statements for three (3) students out of seventy-one (71) tested. The billing statements under reported $3,316; and • The enrollment date was incorrectly reported in COD for seventy-five (75) students out of ninety-three (93) tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording to the COD system.   Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-003. Recommendation I recommend that ABC implements controls to ensure that information reported to the COD system is accurate. Management's Response Management concurs with this finding. The College will ensure the accuracy of the data that is input into the COD system and the College will work to apply funds appropriately to students' accounts. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to managing the COD system. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will ensure the accuracy of the data that is input into the COD system and the College will work to apply funds appropriately to students' accounts. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to managing the COD system. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-003

Audit Finding Reference Number 2023 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Student Financial Assistance Programs, Section III Part N – Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFT 668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student’s account, and those funds exceed the student’s allowable charges, a SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student’s account or the first day of classes of the payment period. Conditions and Contexts I noted during my thirty (30) out of ninety-three (93) students audit had student financial aid credit balances but ABC did not refund the credit balances to the students within the fourteen (14) day requirement. Cause It appears that ABC did not ensure the students receive their refunds checks within the prescribed timeframe. Repeat Finding No. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their refund checks within the required timeframes as required by Title IV regulations. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal regulations as it relates to resolving credit balances. The College will resolve credit balances timely and within the 14-day period as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal regulations as it relates to resolving credit balances. The College will resolve credit balances timely and within the 14-day period as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Audit Finding Reference Number 2023 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Student Financial Assistance Programs, Section III Part N – Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFT 668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student’s account, and those funds exceed the student’s allowable charges, a SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student’s account or the first day of classes of the payment period. Conditions and Contexts I noted during my thirty (30) out of ninety-three (93) students audit had student financial aid credit balances but ABC did not refund the credit balances to the students within the fourteen (14) day requirement. Cause It appears that ABC did not ensure the students receive their refunds checks within the prescribed timeframe. Repeat Finding No. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their refund checks within the required timeframes as required by Title IV regulations. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal regulations as it relates to resolving credit balances. The College will resolve credit balances timely and within the 14-day period as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal regulations as it relates to resolving credit balances. The College will resolve credit balances timely and within the 14-day period as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

Audit Finding Reference Number 2023 – 005 – Student Status Confirmation Report Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV Regulations, 34 CFR Section 682.610 (c) (i) (ii) (iii) stipulated that if a university discovers that a loan has been made to or on behalf of a student who enrolled at that school, but who has ceased to be enrolled on at least a half-time basis; a student who has been accepted for enrollment at that school, but who failed to enroll on at least a half-time basis for the period for which the loan was intended, or a full-time student who has ceased to be enrolled on a full-time basis, ABC must notify the guarantee agency, the National Student Clearinghouse and/or the National Student Loan Data System (NSLDS). Schools are required to report enrollment data at least every sixty (60) days. Conditions and Contexts I noted during my audit twenty-two (22) students out of twenty-seven (27) tested whose change in enrollment status was reported correctly in the NSLDS system; however, the students’ status change was reported greater than the every sixty (60) days timeframe . Cause It appears that ABC did not properly report the student’s enrollment status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Questioned Costs For purposes of this condition, I do not have any questioned costs. Effect Noncompliance with federal regulations. ABC did not properly report the student’s status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-005. Recommendation I recommend that ABC determine the student’s proper enrollment status and report the accurate status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Management’s Response Management concurs with this finding. The College will set policies, procedures and practices in place and adhere to ensure that changes in students’ enrollment are reported accurately and timely as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Registrar Effective: Immediately and ongoing

Management concurs with this finding. The College will set policies, procedures and practices in place and adhere to ensure that changes in students’ enrollment are reported accurately and timely as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Registrar Effective: Immediately and ongoing

2022-005

Audit Finding Reference Number 2023 – 005 – Student Status Confirmation Report Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV Regulations, 34 CFR Section 682.610 (c) (i) (ii) (iii) stipulated that if a university discovers that a loan has been made to or on behalf of a student who enrolled at that school, but who has ceased to be enrolled on at least a half-time basis; a student who has been accepted for enrollment at that school, but who failed to enroll on at least a half-time basis for the period for which the loan was intended, or a full-time student who has ceased to be enrolled on a full-time basis, ABC must notify the guarantee agency, the National Student Clearinghouse and/or the National Student Loan Data System (NSLDS). Schools are required to report enrollment data at least every sixty (60) days. Conditions and Contexts I noted during my audit twenty-two (22) students out of twenty-seven (27) tested whose change in enrollment status was reported correctly in the NSLDS system; however, the students’ status change was reported greater than the every sixty (60) days timeframe . Cause It appears that ABC did not properly report the student’s enrollment status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Questioned Costs For purposes of this condition, I do not have any questioned costs. Effect Noncompliance with federal regulations. ABC did not properly report the student’s status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-005. Recommendation I recommend that ABC determine the student’s proper enrollment status and report the accurate status to the guarantee agency, National Student Clearinghouse, and/or NSLDS. Management’s Response Management concurs with this finding. The College will set policies, procedures and practices in place and adhere to ensure that changes in students’ enrollment are reported accurately and timely as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Registrar Effective: Immediately and ongoing

Management concurs with this finding. The College will set policies, procedures and practices in place and adhere to ensure that changes in students’ enrollment are reported accurately and timely as defined in the Federal guidelines. Responsible Administrators: Director of Financial Aid & Registrar Effective: Immediately and ongoing

2022-005

Audit Finding Reference Number Questioned Costs 2023 – 006 – Ineligible Aid Recipients $ 31,666 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations 34 CFR 668.32 (a)(2) stipulates that a student is eligible to receive Title IV Direct Loans if the student is enrolled at least half-time at an eligible institution. Conditions and Contexts I noted during my testing nine (9) students out of seventy-one (71) students tested who was not enrolled at least half-time and received Direct loans. Cause It appears that ABC did not property administer and disburse Title IV aid to eligible recipients. Questioned Costs For purposes of this condition, I have questioned costs totaling $31,666 related to the Direct loan program. Effect ABC disbursed financial aid to an ineligible student. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-006. Recommendation I recommend that management of ABC adhere to established procedures to ensure that all federal funds are disbursed to eligible students. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to disbursing and administering federal aid. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid, Chief Financial Officer & V.P. of Academic Affairs Effective: Immediately and ongoing.

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to disbursing and administering federal aid. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid, Chief Financial Officer & V.P. of Academic Affairs Effective: Immediately and ongoing

2022-006

Audit Finding Reference Number Questioned Costs 2023 – 006 – Ineligible Aid Recipients $ 31,666 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations 34 CFR 668.32 (a)(2) stipulates that a student is eligible to receive Title IV Direct Loans if the student is enrolled at least half-time at an eligible institution. Conditions and Contexts I noted during my testing nine (9) students out of seventy-one (71) students tested who was not enrolled at least half-time and received Direct loans. Cause It appears that ABC did not property administer and disburse Title IV aid to eligible recipients. Questioned Costs For purposes of this condition, I have questioned costs totaling $31,666 related to the Direct loan program. Effect ABC disbursed financial aid to an ineligible student. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-006. Recommendation I recommend that management of ABC adhere to established procedures to ensure that all federal funds are disbursed to eligible students. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to disbursing and administering federal aid. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid, Chief Financial Officer & V.P. of Academic Affairs Effective: Immediately and ongoing.

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to disbursing and administering federal aid. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid, Chief Financial Officer & V.P. of Academic Affairs Effective: Immediately and ongoing

2022-006

Audit Finding Reference Number Questioned Costs 2023 – 007 – Satisfactory Academic Progress $40,110 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 668.32 (f) stipulates that students participating in the Title IV Federal Financial Aid program must be maintaining satisfactory progress in the course of study he or she is pursuing, according to the standards and practices of that institution to receive student financial aid. OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Appendix A, Student Financial Assistance – Special Tests and Provisions Compliance Requirement Number 9 – Satisfactory Academic Progress stipulates that a student must maintain good standing, or satisfactory progress. Title IV regulations CFD 668.16 (e) stipulates that an institution must establish, publish and apply reasonable standards for measuring satisfactory academic progress. Conditions and Contexts I noted during my audit that seven (7) students out of ninety-three (93) tested were awarded and received financial, although the students did not meet ABC’s standards for achieving satisfactory academic progress, nor were valid satisfactory academic progress appeals documentation available. Cause It appears that ABC inadvertently disbursed aid to academically ineligible students. Questioned Costs For the purpose of this condition, I have questioned costs totaling $40,110 as follows: Program Amount Federal PELL $24,733 Federal Direct Loan 15,377 Total $40,110 Effect It appears that ABC disbursed financial aid to a student that did not maintain satisfactory academic progress. Repeat Finding No. Recommendation I recommend that ABC adhere to established policies and procedures as documented in the revised satisfactory academic progress policy and monitor the academic standing of all students prior to awarding student financial aid, and ensure all required appeals documented is maintained. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to students meeting satisfactory academic progress. The College has an SAP appeal committee in place to enforce and abide by the College's policy. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing.

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to students meeting satisfactory academic progress. The College has an SAP appeal committee in place to enforce and abide by the College's policy. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing

Audit Finding Reference Number Questioned Costs 2023 – 007 – Satisfactory Academic Progress $40,110 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 668.32 (f) stipulates that students participating in the Title IV Federal Financial Aid program must be maintaining satisfactory progress in the course of study he or she is pursuing, according to the standards and practices of that institution to receive student financial aid. OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Appendix A, Student Financial Assistance – Special Tests and Provisions Compliance Requirement Number 9 – Satisfactory Academic Progress stipulates that a student must maintain good standing, or satisfactory progress. Title IV regulations CFD 668.16 (e) stipulates that an institution must establish, publish and apply reasonable standards for measuring satisfactory academic progress. Conditions and Contexts I noted during my audit that seven (7) students out of ninety-three (93) tested were awarded and received financial, although the students did not meet ABC’s standards for achieving satisfactory academic progress, nor were valid satisfactory academic progress appeals documentation available. Cause It appears that ABC inadvertently disbursed aid to academically ineligible students. Questioned Costs For the purpose of this condition, I have questioned costs totaling $40,110 as follows: Program Amount Federal PELL $24,733 Federal Direct Loan 15,377 Total $40,110 Effect It appears that ABC disbursed financial aid to a student that did not maintain satisfactory academic progress. Repeat Finding No. Recommendation I recommend that ABC adhere to established policies and procedures as documented in the revised satisfactory academic progress policy and monitor the academic standing of all students prior to awarding student financial aid, and ensure all required appeals documented is maintained. Management’s Response Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to students meeting satisfactory academic progress. The College has an SAP appeal committee in place to enforce and abide by the College's policy. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing.

Management concurs with this finding. The College will review and adhere to its practices, policies, and procedures along with federal guidelines as it relates to students meeting satisfactory academic progress. The College has an SAP appeal committee in place to enforce and abide by the College's policy. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing

Audit Finding Reference Number Questioned Cost 2023 – 008 – Aid in Excess of Documented Need $10,693 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5 Section E (Eligibility) specified that the annual award should be calculated based upon certain factors and coordinated among all programs to ensure that the total aid is not awarded in excess of the student’s financial need. Title IV regulations, Section(s) 673.5, 682.603, and 685.301 state that an institution may not award financial aid to a student if the aid, when combined with other resources, exceeds the student’s financial need. Conditions and Contexts During my audit I noted five (5) students out of ninety-three (93) tested received financial aid in excess of their documented need. Cause It appears that ABC did not properly monitor the awarding and disbursing of financial aid to certain students. Questioned Costs For purposes of this condition, I have questioned costs totaling $10,693 as follows: Program Amount Federal Pell Grant $ 4,936 Federal Direct Loan 5,757 Total $10,693 Effect The failure of ABC to consider all available resources resulted in the over awarding of financial aid. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-008. Recommendation I recommend that ABC adhere to established procedures and ensure that the total financial aid received by students does not exceed their documented need. Management’s Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to over awarding students. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to over awarding students. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-008

Audit Finding Reference Number Questioned Cost 2023 – 008 – Aid in Excess of Documented Need $10,693 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5 Section E (Eligibility) specified that the annual award should be calculated based upon certain factors and coordinated among all programs to ensure that the total aid is not awarded in excess of the student’s financial need. Title IV regulations, Section(s) 673.5, 682.603, and 685.301 state that an institution may not award financial aid to a student if the aid, when combined with other resources, exceeds the student’s financial need. Conditions and Contexts During my audit I noted five (5) students out of ninety-three (93) tested received financial aid in excess of their documented need. Cause It appears that ABC did not properly monitor the awarding and disbursing of financial aid to certain students. Questioned Costs For purposes of this condition, I have questioned costs totaling $10,693 as follows: Program Amount Federal Pell Grant $ 4,936 Federal Direct Loan 5,757 Total $10,693 Effect The failure of ABC to consider all available resources resulted in the over awarding of financial aid. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-008. Recommendation I recommend that ABC adhere to established procedures and ensure that the total financial aid received by students does not exceed their documented need. Management’s Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to over awarding students. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to over awarding students. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-008

Audit Finding Reference Number Questioned Cost 2023 – 009 – Pell Grant Calculations $8,608 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR Section 690.62 (a) stipulates that the amount of a student’s Pell Grant for an academic year is based upon the payment and disbursement schedules published by the Secretary for each year. Each student’s Pell grant is based upon their enrollment status, cost of attendance and expected family contribution. Conditions and Contexts During my audit I noted twenty-four (24) students out of eighty-seven (87) tested whose Pell grant amount was calculated incorrectly. This resulted in ABC over-disbursing Pell in the amount of $8,608. Cause It appears that ABC did not review and verify all components of the Pell grant calculation to ensure the proper amount of Pell was disbursed. Questioned Costs For purposes of this condition, I have questioned costs totaling $8,608. Effect ABC disbursed excess Pell grant funds to students. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-009. Recommendation I recommend that ABC adhere to federal prescribed regulations by calculating and disbursing Pell grants in accordance with the Department of Education’s Pell payment schedule and in accordance with the Lifetime Eligibility Usage limits. Management’s Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to calculating and awarding Pell. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to calculating and awarding Pell. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-009

Audit Finding Reference Number Questioned Cost 2023 – 009 – Pell Grant Calculations $8,608 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) Federal Award Number June 30, 2023 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR Section 690.62 (a) stipulates that the amount of a student’s Pell Grant for an academic year is based upon the payment and disbursement schedules published by the Secretary for each year. Each student’s Pell grant is based upon their enrollment status, cost of attendance and expected family contribution. Conditions and Contexts During my audit I noted twenty-four (24) students out of eighty-seven (87) tested whose Pell grant amount was calculated incorrectly. This resulted in ABC over-disbursing Pell in the amount of $8,608. Cause It appears that ABC did not review and verify all components of the Pell grant calculation to ensure the proper amount of Pell was disbursed. Questioned Costs For purposes of this condition, I have questioned costs totaling $8,608. Effect ABC disbursed excess Pell grant funds to students. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2022-009. Recommendation I recommend that ABC adhere to federal prescribed regulations by calculating and disbursing Pell grants in accordance with the Department of Education’s Pell payment schedule and in accordance with the Lifetime Eligibility Usage limits. Management’s Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to calculating and awarding Pell. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to calculating and awarding Pell. The College will return any ineligible funds accordingly. Responsible Administrators: Director of Financial Aid & Chief Financial Officer Effective: Immediately and ongoing

2022-009

Audit Finding Reference Number Questioned Costs 2023 – 011 – Aggregate Loan Limits $4,804 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria CFR 685.203 (d) stipulates the aggregate unpaid principal amount of all Direct subsidized loans made to a student but excluding the amount of capitalized interest may not exceed (1) for dependent undergraduate students $31,000, (2) for independent undergraduate student or dependent undergraduate who qualifies for additional eligibility, $57,500 and (3) for graduate or professional students, $138,500. The total amount of Direct subsidized loans but excluding the amount of capitalized interest may not exceed (1) for a dependent undergraduate student $23,000. Conditions and Contexts I noted during my audit three (3) dependent students out of twenty-one (21) tested received direct loans in excess of the aggregate loan limit. Cause It appears that ABC did not ensure that the student was eligible to receive the loan proceeds. Questioned Costs For purposes of this condition, I have questioned costs totaling $4,804 related to the Direct loan program. Effect ABC has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. Repeat Finding No. Recommendation I recommend that the management of ABC take immediate steps to ensure that students receive their loan funds as required by Title IV regulations. Management Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to disbursing loans within aggregate loan limits. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to disbursing loans within aggregate loan limits. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing

Audit Finding Reference Number Questioned Costs 2023 – 011 – Aggregate Loan Limits $4,804 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2023 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria CFR 685.203 (d) stipulates the aggregate unpaid principal amount of all Direct subsidized loans made to a student but excluding the amount of capitalized interest may not exceed (1) for dependent undergraduate students $31,000, (2) for independent undergraduate student or dependent undergraduate who qualifies for additional eligibility, $57,500 and (3) for graduate or professional students, $138,500. The total amount of Direct subsidized loans but excluding the amount of capitalized interest may not exceed (1) for a dependent undergraduate student $23,000. Conditions and Contexts I noted during my audit three (3) dependent students out of twenty-one (21) tested received direct loans in excess of the aggregate loan limit. Cause It appears that ABC did not ensure that the student was eligible to receive the loan proceeds. Questioned Costs For purposes of this condition, I have questioned costs totaling $4,804 related to the Direct loan program. Effect ABC has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. Repeat Finding No. Recommendation I recommend that the management of ABC take immediate steps to ensure that students receive their loan funds as required by Title IV regulations. Management Response Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to disbursing loans within aggregate loan limits. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing.

Management concurs with this finding. The College will adhere to its policies, procedures, processes, and federal guidelines as it relates to disbursing loans within aggregate loan limits. Responsible Administrators: Director of Financial Aid Effective: Immediately and ongoing

Audit Finding Reference Number Questioned Cost 2022 - 002 - Return of Title IV Funds $28,431 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2022 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (3) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. ABC is a college that is not required to take attendance. Thus, ABC must determine the student’s withdrawal date as either (1) the date, as determined by the institution, that the student began the withdrawal process prescribed by the institution; (2) the date, as determined by the institution, that the student otherwise provided official notification to the institution, in writing or orally, of his or her intent to withdraw; (3) if the student ceases attendance without providing official notification to the institution of his or her withdrawal, the midpoint of the payment period or, if applicable, the period of enrollment; (4) if the institution determines that a student did not begin the withdrawal process or otherwise notify the institution of the intent to withdraw due to illness, accident, grievous personal loss or other circumstances beyond the student’s control, the date the institution determines is related to that circumstances, (5) if a student does not return from an approved leave of absence, the date that the institution determines the student began the leave of absence; or (6) if the student takes an unapproved leave of absence, the date that the student began the leave of absence. Conditions and Contexts During my audit, I noted the following: • ABC did not return the required Title IV funds within the prescribed timeframe for two (2) students out of six (6) tested. The amount required to be returned totaled $2,846, was not returned; • The Return of Title IV Funds calculation was prepared incorrectly for two (2) out of six (6) students tested. The incorrect calculations resulted in $1,990 in funds to be returned by ABC; • Attendance rosters tested in which ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students’ enrolled courses and received all non-passing grades for eleven (11) of the eleven (11) students selected for testing resulting in $23,595 to be returned by ABC; and • Sixteen (16) students from a listing of 69 (sixty-nine) students received Title IV aid and withdrew but did not have a Return of Title IV Funds calculation on file. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $28,431. Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2021-002. Recommendation I recommend that management immediately make the necessary determination as to whether the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner.

Management will make every effort to accurately complete R2T4 and return funds to COD as appropriate and in a timely manner. Management will use COD software to correctly calculate R2T4.

2021-002

Audit Finding Reference Number 2022 - 003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2022 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: • The PELL amount was disbursed in the COD system did not agree to the students’ billing statements for twenty-one (21) students out of sixty-three (63). The billing statements reported an excess of $36,383; • The Direct loan amounts disbursed in the COD system did not agree to the students’ billing statements for twenty-nine (29) students out of seventy-one (71) tested. The billing statements reported a decrease in Direct loans of $1,437; and • The enrollment date was incorrectly reported in COD for ten (10) students out of sixty-three (63) tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording of the COD system. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2021-003. Recommendation I recommend that ABC implements controls to ensure that information reported to the COD system is accurate.

Management concurs with this finding. Management will continue to train in Financial Aid and Business office.

2021-003

Audit Finding Reference Number 2022 – 005 – Student Status Confirmation Report Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2022 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV Regulations, 34 CFR Section 682.610 (c) (i) (ii) (iii) stipulated that if a university discovers that a loan has been made to or on behalf of a student who enrolled at that school, but who has ceased to be enrolled on at least a half-time basis; a student who has been accepted for enrollment at that school, but who failed to enroll on at least a half-time basis for the period for which the loan was intended, or a full-time student who has ceased to be enrolled on a full-time basis, ABC must notify the guarantee agency and/or the National Student Clearinghouse. Conditions and Contexts I noted during my audit twenty-five (25) students out of twenty-five (25) tested whose enrollment status was not reported or not reported correctly on the student status confirmation reports. Cause It appears that ABC did not properly report the student’s enrollment status to the guarantee agency and/or National Student Clearinghouse. Questioned Costs For purposes of this condition, I do not have any questioned costs. Effect Noncompliance with federal regulations. ABC did not properly report the student’s status to the guarantee agency and/or National Student Clearinghouse. Repeat Finding No. Recommendation I recommend that ABC determine the student’s proper enrollment status and report the accurate status to the guarantee agency and/or National Student Clearinghouse.

Arkansas Baptist College do not agree with the findings. Arkansas Baptist College provided the correct information to the auditor. The information was extracted directly from the Clearinghouse.

Audit Finding Reference Number Questioned Costs 2022 – 006 – Ineligible Aid Recipient $ 1,195 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2022 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations 34 CFR 668.32 (a)(2) stipulates that a student is eligible to receive Title IV Direct Loans if the student is enrolled at least half-time at an eligible institution. Conditions and Contexts I noted during my testing one (1) student out of nineteen (19) students tested who was not enrolled at least half-time and received Direct loans. Cause It appears that ABC did not property administer and disburse Title IV aid to eligible recipients. Questioned Costs For purposes of this condition, I have questioned costs totaling $1,195 related to the Direct loan program. Effect ABC disbursed financial aid to an ineligible student. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2021-006. Recommendation I recommend that management of ABC adhere to established procedures to ensure that all federal funds are disbursed to eligible students.

Arkansas Baptist college concur with this finding. Careful attention will be given to all other ineligible applicants to ensure that they are eligible before packing.

2021-006

Audit Finding Reference Number 2022 – 007 – School Account Statements (SAS) Reports Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2022 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5, Student Financial Assistance Programs, Section III, Part N – Special Test and Provisions, Number 7, Direct Loan Reconciliation stipulated that ABC must reconcile monthly the School Account Statement (SAS) data file to ABC’s financial records. Conditions and Contexts During my audit of the SAS reports, I noted ABC either did not provide support for the SAS reports or provided conflicting information between the College’s financial records, drawdown reports, and the common origination disbursements system. Cause A lack of adequate record keeping by the appropriate personnel. Questioned Costs For the purpose of this finding, I have not questioned costs. Effect ABC is not in compliance with federal record keeping requirements for the reporting. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2021-007. Recommendation I recommend that ABC implement procedures to ensure required reports are prepared as prescribed.

Management does not agree with the auditor as the Department of Education Payment Analysis verifies the amount requested on Form 270 and approves payment as requested. A subsequent adjustment to a student’s financial aid does not affect the original 270. Every financial aid draw is based on known facts as of that date.

2021-007

Audit Finding Reference Number Questioned Cost 2022 – 008 – Aid in Excess of Documented Need $47,586 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) 84.007 Federal Supplemental Educational Opportunity Grant (FSEOG) 84.033 Federal Work-Study (FWS) Federal Award Number June 30, 2022 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5 Section E (Eligibility) specified that the annual award should be calculated based upon certain factors and coordinated among all programs to ensure that the total aid is not awarded in excess of the student’s financial need. Title IV regulations, Section(s) 673.5, 682.603, and 685.301 state that an institution may not award financial aid to a student if the aid, when combined with other resources, exceeds the student’s financial need. Conditions and Contexts During my audit I noted eleven (11) students out of seventy-one (71) tested received financial aid in excess of their documented need. Cause It appears that ABC did not properly monitor the awarding and disbursing of financial aid to certain students. Questioned Costs For purposes of this condition, I have questioned costs totaling $47,586 relating to the Direct loan program. Effect The failure of ABC to consider all available resources resulted in the over awarding of financial aid. Repeat Finding No. Recommendation I recommend that ABC adhere to established procedures and ensure that the total financial aid received by students does not exceed their documented need.

Arkansas Baptist College agrees with the finding however the over awards were created by an outside scholarship after the award process ended. Arkansas Baptist College will revise financial aid awards to include outside scholarships and eliminate over awards.

Audit Finding Reference Number Questioned Cost 2022 – 009 – Pell Grant Annual and Lifetime Eligibility $15,822 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) Federal Award Number June 30, 2022 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR Section 690.62 (a) stipulates that the amount of a student’s Pell Grant for an academic year is based upon the payment and disbursement schedules published by the Secretary for each year. Each student’s Pell grant is based upon their enrollment status, cost of attendance and expected family contribution. The Student Financial Aid Handbook, Section E, Eligibility, indicates students that receive Pell may not receive more than six (6) scheduled awards (twelve (12) semesters, or the equivalent) as measured by the percentage of “lifetime eligibility used” (LEU). The LEU maximum percentage for student eligibility is six hundred percent (600%). Conditions and Contexts During my audit I noted the following: • six (6) students out of fifty-five (55) tested whose Pell grant amount was calculated incorrectly. This resulted in ABC under-disbursing Pell in the amount of $15,822; and • one (1) student out of five (5) tested who was flagged by the Department of Education for possibly exceeding their Lifetime Eligibility Usage of 600%. It was determined the student had not exceeded their LEU. However, ABC reduced the amount of Pell disbursed for the 2021-2022 academic year. It was determined the student had not exceeded Lifetime Eligibility Usage of 600% and could receive the full amount of Pell of $6,495 instead of the $1,624 disbursed. This resulted in ABC under-disbursing Pell in the amount of $4,871. This amount is included in bullet 1 above. Cause It appears that ABC did not review and verify all components of the Pell grant calculation to ensure the proper amount of Pell was disbursed. Questioned Costs For purposes of this condition, I have questioned costs totaling $15,822. Effect ABC disbursed excess Pell grant funds to students. Repeat Finding No. Recommendation I recommend that ABC adhere to federal prescribed regulations by calculating and disbursing Pell grants in accordance with the Department of Education’s Pell payment schedule and in accordance with the Lifetime Eligibility Usage limits.

Arkansas Baptist College disagrees with the finding. NSLDS confirms that the student had not exceeded her Lifetime Eligibility of 600%. She used 571.765% of the 600% she was eligible to receive. Although NSLDS indicates her scheduled award amount is $6,495, she would exceed 600% if awarded the full amount. She was awarded $1,624 which brings per Pell Grant Annual and Lifetime Eligibility to 600%.

Audit Finding Reference Number Questioned Cost 2021 - 002 - Return of Title IV Funds $57,507 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) 84.007 Federal Supplemental Educational Opportunity Grant (SEOG) Federal Award Year June 30, 2021 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (4) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. Conditions and Contexts During my audit, I noted the following: ? ABC did not return the required Title IV funds within the prescribed timeframe for one (1) student out of two (2) tested; ? The Return of Title IV Funds calculation was prepared incorrectly for two (2) out of two (2) students tested. The incorrect calculations did not result in any additional funds to be returned by ABC; ? Attendance rosters tested in which ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students? enrolled courses and received all non-passing grades for fourteen (14) of the twenty-five (25) students selected for testing resulting in $57,507 to be returned by ABC; and ? Two (2) students out of twenty-five (25) tested, received Title IV aid and withdrew, but did not have a Return of Title IV Funds calculation on file. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $57,507 as follows: Program Amount Federal PELL Grant $ 27,213 Federal SEOG 600 Federal Direct Loan 29,694 Total $ 57,507 Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2020-002. Recommendation I recommend that management immediately make the necessary determination as to whether or not the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner. Management's Response Bullet points one and two - Management will make every effort to accurately complete R2T4 and return funds to COD as appropriately and on a timely basis. Additional training has been conducted to ensure that RT24s are calculated correctly using the Jenzabar software system. Bullet point three - Management does not concur with the finding and questioned cost of $57,507 resulting from students receiving failing grades during the 2020-21 academic year. Of the sample of 14 students, 9 students had passing grades in which an R2T4 was not required. Covid has had an adverse impact on teaching and class participation. The College implemented a number of strategies for course deliveries including classroom, a shift to on-line, hybrid class deliveries, splitting semesters hours at various times throughout the semester to achieve the required instructional teaching clock hours. These numerous changes and the mental strain of dealing with Covid and changes to course delivery undoubtedly had a negative impact on student grades and class attendance. As a result of the uncommon nature of class instructions during Covid for FY 2021 and FY 2022, the Vice President for Academic Affairs in concert with the President and Chief Financial Officer has agreed to substitution grades for students that successfully complete the course work on or before July 30, 2023 at no additional cost to the failed students. Bullet point four - RT24s are being completed for the two (2) students. Refunds, if any, will be returned to the Department of Education. Auditors? Rebuttal Bullet point three - The report provided to us by ABC for testing appeared to include a larger population of students than what was provided in previous audits. We notified ABC at the beginning of the audit; the report appeared to perhaps be incorrect. After ABC?s review of the report, ABC confirmed the report was correct and the audit procedures should be based on that report. After the audit work was completed and the findings were submitted to ABC for review, ABC concurred with the finding and no additional audit procedures were performed. Once the finding was included in the draft audit report, ABC began to disagree with the finding and elected to submit documents for our review to resolve the finding. During that process, we ask ABC to provide the correct report needed to ensure the adequate sample size and testing procedures were performed. ABC elected to not provide the correct report for our review and agreed with the finding, as written. Since ABC does not agree with the finding and has indicated some of the students received passing grades, we would need to receive the correct population of students for this area of testing.

2021-002 Return of Title IV Funds Bullet Points 1 and 2. Management will make every effort to accurately complete R2T4 and return funds to COD as appropriately and on a timely basis. Additional training has been conducted to ensure that RT24s are calculated correctly using the Jenzabar software system. Bullet Point 3. Management does not concur with the finding and questioned cost of $57,507 resulting from students receiving failing grades during the 2020-21 academic year. Of the sample of 14 students, 9 students had passing grades in which an R2T4 was not required. Covid has had an adverse impact on teaching and class participation. The College implemented a number of strategies for course deliveries including classroom, a shift to on-line, hybrid class deliveries, splitting semesters hours at various times throughout the semester to achieve the required instructional teaching clock hours. These numerous changes and the mental strain of dealing with Covid and changes to course delivery undoubtedly had a negative impact on student grades and class attendance. As a result of the uncommon nature of class instructions during Covid for FY 2021 and FY 2022, the Vice President for Academic Affairs in concert with the President and Chief Financial Officer has agreed to substitution grades for students that successfully complete the course work on or before July 30, 2023 at no additional cost to the failed students. Bullet Point 4. RT24s are being completed for the two (2) students. Refunds, if any, will be returned to the Dept. of Education. Responsible Parties. Director of Financial Aid for Bullet Point 1, 2 and 3. Vice President for Academic Affairs, Interim President and Interim CFO for bullet point 3. Implementation Dates: Three training sessions on Jenzabar using JICS on Bullet points 1, 2, and 3 April thru August 23, 2022. Bullet point 3 effective August 15 through July 30, 2023.

2020-002

Audit Finding Reference Number 2021 - 003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2021 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are: social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: ? The PELL amount was disbursed in the COD system did not agree to the students? billing statements for four (4) students out of fifty-eight (58). The billing statements reported an excess of $110; ? The Direct loan amounts disbursed in the COD system did not agree to the students? billing statements for sixteen (16) students out of fifty-eight (58) tested. The billing statements reported an excess of $24,066; and ? The enrollment date was incorrectly reported in COD for forty-eight (48) students out of fifty-eight (58) tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording to the COD system. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2020-003. Recommendation I recommend that ABC implement controls to ensure that information reported to the COD system is accurate. Management's Response Bullet points one and two - Corrections to student accounts in the receivable systems have been made. Management will continue to train Financial Aid and Billing Office personnel on the new Jenzabar system and the PowerFAIDS System to alleviate errors. Bullet point three - The actual instruction dates were different from the dates recorded on COD and were never changed in COD. These changes reflect the various instruction delivery methods used during Covid. This was an isolated occurrence. To alleviate future such issues, the College calendar will not change after approved by the President and the Board and all affected departments must sign a transmittal to that calendar dates.

2021-003 Bullet points 1, 2Common Origination and Disbursement System (C0D) Bullet Point 1 and 2. Corrections to student accounts in the receivable systems have been made. Management will continue to train Financial Aid and Billing Office personnel on the new Jenzabar system and the PowerFAIDS System to alleviate errors. Responsible Parties: Director of Financial Aid, Student Billing Manager and Financial Aid Reconciliation Analyst. Implementation Date: Current and on-going Bullet Point 3. The actual instruction dates were different from the dates recorded on COD and were never changed in COD. These changes reflect the various instruction delivery methods used during Covid. This was an isolated occurrence. To alleviate future such issues, the College?s calendar will not change after approved by the President and the Board and all affected departments heads must sign a transmittal to that calendar dates. Responsible Party: Director of Financial Aid Implementation Date: Effective now and on-going.

2020-003

Audit Finding Reference Number 2021 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2021 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Student Financial Assistance Programs, Section III Part N ? Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFR 668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student?s account, and those funds exceed the student?s allowable charges, a SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student?s account or the first day of classes of the payment period. Conditions and Contexts I noted during my twenty-eight (28) out of fifty-three (53) students audit had student financial aid credit balances but ABC did not refund the credit balances to the students within the fourteen (14) day requirement. Cause It appears that ABC did not ensure the students received their refund checks within the prescribed time frame. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2020-004. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their refund checks within the required timeframes as required by Title IV regulations. Management?s Response Management concurs with the finding that some student credit balance refunds were not all paid within the prescribed time. To alleviate this problem in the future, management has made the refund bank account an impress fund where the account is replenished at the end of every month. Additional funds will be deposited in the bank account as necessary for timely refunds. Every effort will be made to ensure that credit balance refunds are paid within the prescribed time limit.

2021-004 Student Credit Balances Management concurs with the finding that some student credit balance refunds were not all paid within the prescribed time. To alleviate this problem in the future, management has made the refund bank account an impress fund where the account is replenished at the end of every month. Additional funds will be deposited in the bank account as necessary for timely refunds. Every effort will be made to ensure that credit balance refunds are paid within the prescribed time limit. Responsible Parties: Interim CFO and Controller Implementation Date: 9/15/2022

2020-004

Audit Finding Reference Number Questioned Costs 2021 ? 005 ? Direct Annual Loan Limit/PLUS Denial $ 9,913 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2021 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 685.203 (a) stipulates annual loan limits based upon the undergraduate student?s completed years of program of undergraduate education. The annual loan limit for a student who has not completed the 1st year of study is $3,500, 2nd year of study is $4,500 and remainder of the program is $5,500. Title IV regulations, 34 CFR 685.203 (b) stipulates that a dependent student may receive an additional unsubsidized loan in the amount of $2,000. Students whose parents are likely to be precluded by exceptional circumstances from receiving a PLUS loan may be eligible for an unsubsidized loan beyond the base amount of $2,000. Conditions and Contexts I noted during my audit: ? four (4) students out of thirty-eight (38) tested whose accounting records reported the students received Direct loans in excess of the annual limits; and ? two (2) dependent students out of twenty-nine (29) tested received an unsubsidized loan in excess of the $2,000 annual limit without documentation of parental denial of a PLUS loan. Cause It appears that ABC?s accounting records did not report the proper amount of loan proceeds. Questioned Costs For purposes of this condition, I have questioned costs totaling $9,913 related to the Direct Loan program. Effect ABC has not adhered to Title IV regulations regarding the recording and disbursing of loan funds in accordance with the regulations. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2020-006. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their loan funds as required by Title IV regulations and is property recorded by ABC. Management?s Response Management concurs with the finding. The questioned cost amount of $9,913 is in the process of being returned to the Department of Education?s COD. The Reconciliation Accountant has been assigned the task of reviewing the financial aid accounts for compliance with federal financial aid regulations.

2021-005 Direct Annual Loan Limit/Plus Denial Management concurs with the finding. The questioned cost amount of $9,913 is in the process of being returned to the Department of Education?s COD. The Reconciliation Accountant has been assigned the task of reviewing the financial aid accounts for compliance with federal financial aid regulations. Responsible Party: Director of Financial Aid for oversight and Staff for review Implementation Date: Effective now and on-going.

2020-006

Audit Finding Reference Number Questioned Costs 2021 ? 006 ? Ineligible Aid Recipient $ 2,722 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2021 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations 34 CFR 668.32 (a)(2) stipulates that a student is eligible to receive Title IV Direct Loans if the student is enrolled at least half-time at an eligible institution. Conditions and Contexts I noted during my testing one (1) student out of thirty-eight (38) students tested who was not enrolled at least half-time and received Direct loans. Cause It appears that ABC did not property administer and disburse Title IV aid to eligible recipients. Questioned Costs For purposes of this condition, I have questioned costs totaling $2,722 related to the Direct loan program. Effect ABC disbursed financial aid to an ineligible student. Repeat Finding No. Recommendation I recommend that management of ABC adhere to established procedures to ensure that all federal funds are disbursed to eligible students. Management?s Response Management does not concur with the auditor?s finding that a student?s loan should have been returned because his credit hours fell below the threshold to receive federal loans. The semester began on August 3, 2020 where the student was enrolled in six (6) credit hours on the 14th class day and continued enrollment in both courses until one of his instructors administratively withdrew him from one course on November 11, 2020 after the 60 percent point (October 11, 2020). His loan was disbursed on January 12, 2021. We believe that the College is entitled to the loan proceeds used to pay direct cost of attendance. Auditors? Rebuttal ABC initially agreed with this finding. Once the finding was included in the draft copy of the audit report, ABC disagreed with the finding. The auditors agree that the student attended over sixty percent (60%) of enrollment and earned a significant amount of Title IV aid received. However, pages 4-38 and 4-39 of the 2020-2021 Student Financial Aid Handbook denotes provisions regarding checking eligibility at the time of disbursing Title IV aid. The Handbook indicates, before disbursing Title IV funds, the school must determine and document that the student remains eligible to receive the type and amount Title IV aid. It identified the most common change that would make a student ineligible for a Direct loan disbursement is if the student has dropped below half-time (?) enrollment. It is important that the financial aid office have a system in place to verify the student?s enrollment status at the time of disbursement. The Direct loan amount was disbursed after the student dropped below half (?) time, thus making him ineligible.

2021-006. Ineligible Aid recipient Management does not concur with the auditor?s finding that a student?s loan should have been returned because his credit hours fell below the threshold to receive federal loans. The semester began on August 3, 2020 where the student was enrolled in six (6) credit hours on the 14th class day and continued enrollment in both courses until one of his instructors administratively withdrew him from one course on November 11, 2020 after the 60 percent point (October 11, 2020). His loan was disbursed on January 12, 2021. We believe that the College is entitled to the loan proceeds used to pay direct cost of attendance. Responsible Party: Director of Financial Aid Implementation Date: Effective now and on-going.

Audit Finding Reference Number 2021 ? 007 ? School Account Statements (SAS)/Form 270 Reports Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Number June 30, 2021 Federal Agencies U.S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5, Student Financial Assistance Programs, Section III, Part N ? Special Test and Provisions, Number 7, Borrower Data and Reconciliation stipulated that ABC must reconcile monthly the School Account Statement (SAS) data file to ABC?s financial records. OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5, Student Financial Assistance Programs, (L)(1)(d) indicates ABC must prepare and submit Form 270, Request for Title IV Reimbursement or Heightened Cash Monitoring 2 (HCM2) reports to request reimbursement. Also, under the HCM2 payment method, ABC makes Title IV disbursements to eligible students and submit Direct Loan, PELL Grant, TEACH Grant, and Iraq and Afghanistan Service Grants (IASG) origination and disbursement records to the Common Origination and Disbursement System. Conditions and Contexts During my audit of the SAS and Form 270 reports, I noted: ? ABC provided conflicting information between the College?s financial records, drawdown reports, common origination disbursements system, the monthly School Account Statement and monthly Form 270 reports; and ? During my audit of the monthly Heightened Cash Monitoring 2 (HCM2) Form 270 spreadsheets reports, I noted the Direct loan amounts reported as disbursed and drawdown on the monthly school account statement did not agree to the amounts reported on the HCM2 Form 270 report for one (1) out of two (2) tested. Cause A lack of adequate record keeping by the appropriate personnel. Questioned Costs For the purpose of this finding, I have not questioned costs. Effect ABC is not in compliance with federal record keeping requirements for the SAS and HCM2 Form 270 reporting. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2020-009 and 2020-010. Recommendation I recommend that ABC implement procedures to ensure required reports are prepared as prescribed. Management?s Response Management does not agree with the auditor as the Department of Education Payment Analyst verifies the amount requested against the Form 270 and approves payments as requested. A subsequent adjustment to a student?s financial aid does not affect the original 270. Every financial aid draw is based on known facts as of that date. Adjustments to student aid should be made as the facts dictate. Auditors? Rebuttal The SAS, HCM2, COD and PowerFAIDs reports provided at the time of review for the audit were conflicting. The verified reports provided to the Department of Education Payment Analyst were not provided during the audit for review. We asked ABC to provide the reports that reconciled and agreed to the various documents for our review, and possible resolution of this finding, but none were provided.

2021-007. School Account Statements (SAS)/Form 270 Reports Management does not agree with the auditor as the Department of Education Payment Analyst verifies the amount requested against the Form 270 and approves payments as requested. A subsequent adjustment to a student?s financial aid does not affect the original 270. Every financial aid draw is based on known facts as of that date. Adjustments to student aid should be made as the facts dictate. Responsible Parties: Director of Financial Aid, Student Billing Manager and Financial Aid Reconciliation Analyst. Implementation Date: Current and on-going

2020-010

2020 - 002 - Return of Title IV Funds $1,225 Questioned Costs Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (4) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. Conditions and Contexts During my audit, I noted the following: ? ABC did not return the required Title IV funds within the prescribed timeframe for two (2) students out of ten (10) tested; ? No documentation was provided to verify that the College returned the required Title IV funds for two (2) out of ten (10) students selected for testing. The amount of funds required to be returned totaled $1,021; ? The Return of Title IV Funds calculation was prepared incorrectly for one (1) out of ten (10) students tested. The incorrect calculations resulted in an additional $204 to be returned by the College; and ? Attendance rosters tested in which ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students? enrolled courses for one (1) of the seven (7) students selected for testing. Prior to issuance of the audit report, the College prepared the Return of Title IV Funds calculation and adjusted the Title IV aid on the billing statement. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $1,225 as follows: Program Amount Federal PELL Grant $ 204 Federal Direct Loan 1,021 Total $ 1,225 Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2019-002. Recommendation I recommend that management immediately make the necessary determination as to whether or not the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner.

As per 34 CFR 668.22, management concurs with this finding. Arkansas Baptist College (ABC) has hired financial aid additional staff to assist with ensuring Return to Title IV Funds compliance. Management continues to participate in the National Association of Student Financial Administrators (NASFAA) online training course for Return to Title IV Funds; the US Department of Education?s Minority-Serving and Under-Resourced Schools Division (MSURD) training; and the Federal Student Aid Virtual Training Conference. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with Return to Title IV Funds regulations. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Reconciliation Specialist, Registrar, Student Accounts Coordinator, Title III Director, Jenzabar Project Manger Implementation Date November 1, 2020

2019-002

2020 - 003 - Common Origination and Disbursement (COD) System CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) Financial Reporting, indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are: social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: ? The PELL amount disbursed in the COD system did not agree to the students? billing statements for nineteen (19) students out of one-hundred and thirty-eight (138) tested; ? The Direct loan amounts disbursed in the COD system did not agree to the students? billing statements for twenty (20) students out of one-hundred and thirty-eight (138) tested; ? The enrollment date was incorrectly reported in COD for twenty-six (26) students out of one-hundred and thirty-eight (138) tested; ? The cost of attendance was incorrectly reported in the COD system for one-hundred and twenty-six (126) students out of one-hundred and thirty-eight (138) tested; ? ABC is on HCM2 and must make disbursements to the students? account before the reimbursement payment request is submitted. The Direct loans amount was posted to the student?s account after the payment was made in COD for three (3) students out of one-hundred and thirty-eight (138) students tested; and ? ABC is on HCM2 and must make disbursements to the students? account before the reimbursement payment request is submitted. The PELL amount was posted to the student?s account after the payment was made in COD for six (6) students out of one-hundred and thirty-eight (138) students tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording to the COD system. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2019-003. Recommendation I recommend that ABC implement controls to ensure that information reported to the COD system is accurate.

Pursuant to CFR 668.15(b)(1), management concurs with this finding. Arkansas Baptist College (ABC) has hired additional financial aid staff to assist with ensuring reconciliation and disbursement compliance. Management continues to participate in the US Department of Education?s Minority-Serving and Under-Resourced Schools Division (MSURD) training, as well as the Federal Student Aid Virtual Training Conference. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with disbursement reporting and reconciliation. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Reconciliation Specialist, Registrar, Student Accounts Coordinator, Title III Director, Jenzabar Project Manager Implementation Date November 1, 2020

2019-003

2020 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Student Financial Assistance Programs, Section III Part N ? Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFR 668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student?s account, and those funds exceed the student?s allowable charges, a SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student?s account or the first day of classes of the payment period. Conditions and Contexts I noted during my audit forty-three (43) out of one-hundred and thirty-eight (138) students had student financial aid credit balances but ABC did not refund the credit balances to the students within the fourteen (14) day requirement. Cause It appears that ABC did not ensure that the students received their refund checks within the prescribed time frame and not refunds be remitted until the Title IV aid is received. Questioned Costs For purposes of this condition, I have not questioned any costs. Effect ABC has not adhered to Title IV regulations regarding the disbursing of excess funds to students within a timely manner. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2019-004. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their refund checks within the required timeframes as required by Title IV regulations.

Pursuant to CFR 668.15(d)(1), Arkansas Baptist College concurs with this finding. Arkansas Baptist College (ABC) has hired additional financial aid staff to assist the Business Office with clearing student credit balances. Management continues to participate in the US Department of Education?s Minority-Serving and Under-Resourced Schools Division (MSURD) training, as well as the Federal Student Aid Virtual Training Conference. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with Federal Student Credit Balance requirements. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Reconciliation Specialist, Registrar, Student Accounts Coordinator, Title III Director, Jenzabar Project Manager Implementation Date November 1, 2020

2019-004

2020 - 005 - Reconciliation of Title IV Accounts Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity None Criteria Volume 4, Chapter 6 of the 2019-2020 Federal Student Aid Handbook specifies that a school that participates in the Direct Loan program is required to reconcile cash received from the U.S. Department of Education?s Grant management system G5, to the actual disbursement records submitted to the Common Origination and Disbursement System on a monthly basis with a final year-end closeout annually. Conditions and Contexts I noted during my audit ABC did not complete an external reconciliation of the funds received in G5 to the funds disbursed in the Common Origination and Disbursement System and funds recorded in the College?s accounting records on a monthly or annual basis. In order to properly and effectively prepare the external reconciliation, ABC should complete an internal reconciliation between the business office and the student financial aid office. Cause Management of ABC did not adhere to established procedures which required monthly reconciliations between the business office, the student financial aid office, the G5 system, and the Common Origination and Disbursement System. Questioned Costs For purposes of the noted condition, I have not questioned any costs. Effect ABC is not in compliance with the reconciliation requirements of the Student Financial Aid Handbook. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2019-005. Recommendation I recommend that the student financial aid office and the business office work together to compare records of disbursed amounts and perform monthly and annual reconciliations.

As per 34 CFR 668.16 as well as 34 CFR 668, Subpart L, 668.171 through 668.175, management concurs with this finding. The Office of Student Financial Aid and the Business Office requisite staff have met to improve the monthly and annual reconciliation processes. In addition, the Office of Student Financial Aid and the Business Office are leveraging technology to ensure compliance. The offices have completed Jenzabar EX and PowerFAIDS reconciliation training to improve and expedite the process. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with Return to Title IV Funds regulations. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Reconciliation Specialist, Registrar, Student Accounts Coordinator, Title III Director, Jenzabar Project Manager Implementation Date November 1, 2020

2019-005

2020 ? 006 ? Unsubsidized Annual Loan Limit/PLUS Denial $ 1,217 Questioned Costs Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 685.203 (b) stipulates that a dependent student may receive an additional unsubsidized loan in the amount of $2,000. Students whose parents are likely to be precluded by exceptional circumstances from receiving a PLUS loan may be eligible for an unsubsidized loan beyond the base amount of $2,000. Conditions and Contexts I noted during my audit, one (1) dependent student out of twenty-one (21) tested received an unsubsidized loan in excess of the $2,000 annual limit without documentation of parental denial of a PLUS loan. Cause It appears that ABC did not ensure that the students were eligible to receive the loan proceeds. Questioned Costs For the purpose of this condition, I have questioned costs totaling $1,217 related to the Direct Loan program. Effect ABC has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2019-006. Recommendation I recommend that management ABC take immediate steps to ensure that students receive their loans funds as required by Title IV regulations.

Pursuant to 34 CFR 685.203(c)(1)(ii), management concurs with this finding. In order to ensure compliance, we will utilize the PowerFAIDS system to track the receipt of electronic PLUS loan credit checks. Arkansas Baptist College staff will continue to to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with this regulation. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Title III Director, Jenzabar Project Manager Implementation Date November 1, 2020

2019-006

2020 ? 007 ? Satisfactory Academic Progress $ 38,955 Questioned Cost Federal Program and Specific Federal Award Identification CFDA Title and Number 84.007 Federal Supplemental Educational Opportunity Grant (SEOG) 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 668.32 (f) stipulates that students participating in the Title IV Federal Financial Aid program must be maintaining satisfactory progress in the course of study he or she is pursuing, according to the standards and practices of that institution to receive student financial aid. OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Appendix A, Student Financial Assistance ? Student Eligibility Compliance Requirement Number (7) ? Institutional Eligibility stipulates that a student must maintain good standing, or satisfactory progress. Title IV regulations 34 CFD 668.16 (e) stipulates that an institution must establish, publish and apply reasonable standards for measuring satisfactory academic progress. Conditions and Contexts I noted during my audit that six (6) students out of one-hundred and thirty-eight (138) tested were awarded and received financial aid, although the students did not meet ABC?s standards for achieving satisfactory academic progress, nor were valid satisfactory academic progress appeals documentation available. The amount of funds returned related to the six (6) students was $38,955. Cause It appears that ABC inadvertently disbursed aid to academically ineligible students. Questioned Costs For the purpose of this condition, I have questioned costs totaling $38,955 as follows: Program Amount Federal PELL $ 17,809 Federal Direct Loan 20,346 Federal SEOG 800 Total $ 38,955 Effect It appears that ABC disbursed financial aid to a student that did not maintain satisfactory academic progress. Repeat Finding No. Recommendation I recommend that ABC adhere to established policies and procedures as documented in the revised satisfactory academic progress policy and monitor the academic standing of all students prior to awarding student financial aid, and ensure all required appeals documented is maintained.

Pursuant to 34 CFR 685.32(f), management concurs with this finding. In order to ensure compliance, we will utilize the PowerFAIDS and Jenzabar One system, as well as the recently implemented Inceptia SAP Advisor to track Satisfactory Academic Progress. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with Satisfactory Academic regulations. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Title III Director, Registrar, Jenzabar Project Manager Implementation Date November 1, 2020

2020 ? 009 ? School Account Statements (SAS) Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2020 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Uniform Guidance Compliance Supplement, Part 5, Student Financial Assistance Programs, Section III, Part N ? Special Test and Provisions, Number 6, Borrower Data and Reconciliation stipulated that ABC must report all loan disbursements and submit required records to Common Origination Disbursement System (COD) within fifteen (15) days of disbursement. Each month ABC must reconcile the School Account Statement (SAS) data file to ABC?s financial records. Conditions and Contexts During my audit I noted ABC provided conflicting information between the College?s financial records and the monthly School Account Statement reports. Cause A lack of adequate record keeping by the appropriate personnel. Questioned Costs For the purpose of this finding, I have not questioned any costs. Effect ABC is not in compliance with federal record keeping requirements. Repeat Finding No. Recommendation I recommend that ABC implement procedures to ensure required reports are prepared as prescribed.

As per 34 CFR 668.16 as well as 34 CFR 668, Subpart L, 668.171 through 668.175, management concurs with this finding. The Office of Student Financial Aid and the Business Office requisite staff have met to improve the monthly and annual reconciliation processes as well as record keeping. In addition, the Office of Student Financial Aid and the Business Office are leveraging technology to ensure compliance. The offices have completed Jenzabar EX and PowerFAIDS reconciliation training to improve and expedite the process. Arkansas Baptist College staff will continue to receive training from the College Board and Jenzabar staff to the design processes using PowerFAIDs and Jenzabar One to ensure compliance with data retention requirements for School Account Statements and reconciliation. Person(s) Responsible Director of Financial Aid, Deputy Director of Financial Aid, Reconciliation Specialist, Student Accounts Coordinator, Title III Director, Jenzabar Project Manager, Vice President for Business and Finance\CFO Implementation Date November 1, 2020

Audit Finding Reference Number Questioned Cost 2019 - 002 - Return of Title IV Funds $15,860 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Section (N) (4) specifies that when a student receives Title IV assistance and withdraws from an institution, the institution must determine the amount of Title IV aid earned by the student as of the withdrawal date. The difference between any amounts earned that is less than the amount disbursed must be returned to the Title IV program within the prescribed time frame. Conditions and Contexts During my audit, I noted the following: ? ABC did not return the required Title IV funds within the prescribed timeframe for one (1) student out of eleven (11) tested. The funds were returned after the required timeframe; ? No documentation was provided to verify that the University returned the required Title IV funds for three (3) out of eleven (11) students selected for testing. The amount of funds required to be returned totaled $1,293; ? The Return of Title IV Funds calculation was prepared incorrectly for six (6) out of eleven (11) students tested. The incorrect calculations resulted in an additional $1,445 to be returned by the University; ? One (1) student out of eleven (11) tested whose Return of Title IV Funds calculation was prepared correctly; however, the University did not return the correct amount. The University returned an excess of $788 in Direct Loans; ? No documentation was provided to verify the withdrawal date for one (1) student out of eleven (11) tested. Without the withdrawal date, the Return of Title IV Funds calculation could not be tested for accuracy, and ? Attendance rosters tested in which ABC was unable to document the last date of attendance or participation in any academic related activity for each of the students? enrolled courses for four (4) of the six (6) students selected for testing. The questioned costs associated with this condition totaled $13,910. Cause ABC failed to adhere to established procedures in processing certain refunds. Questioned Costs For purposes of this condition, I have questioned costs totaling $15,328 as follows: Program Amount Federal PELL Grant $ 5,139 Federal Direct Loan 10,721 Total $ 15,860 Effect ABC has not complied with Title IV regulations that specify if a student withdraws from school within a certain time frame, a refund must be processed, calculated properly, and remitted to the Title IV program in accordance with established time frames. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2018-004. Recommendation I recommend that management immediately make the necessary determination as to whether or not the students unofficially withdrew from ABC, prepare the Return of Title IV Funds calculation, and return the funds to the Department of Education in a timely manner.

Audit Finding Reference Number Questioned Cost 2019 - 002 - Return of Title IV Funds $15,860 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Management's Response As per 34 CFR 668.22, management concurs with this finding. In order to improve compliance with Federal regulations while promoting continuous improvement, the current financial aid administrators will work with our Registrar and Academic Affairs Offices to review the steps for our withdrawal process as it relates to Official and Unofficial Withdrawals. ABC is required to take attendance; therefore, we will ensure that we implement as part of our procedures that attendance is properly indicated for each class a student shows enrollment. As part of this improvement, we will use the Jenzabar EX and PowerFAIDS Systems to monitor the R2T4 process. Management will begin using the Return to Title IV Funds Tool in PowerFAIDS, this will ensure that our calculations are performed correctly and will be sent to COD within the 14-day timeframe. Management will utilize the National Association of Student Financial Aid Administrators (NASFAA) online training course for Return of Title IV Funds (October 27, 2020). Person(s) Responsible: Director of Financial Aid, Financial Aid Staff, Registrar, Vice President for Academic Affairs Implementation Date: October 31, 2020

2018-004

Audit Finding Reference Number 2019 -003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 - Student Financial Assistance Programs, Section (L) (1) indicates that schools submit PELL origination records and disbursement records to the COD system. Key items on the origination records are: social security number, award amount, enrollment date, verification status code, transaction number, cost of attendance, and academic calendar. Institutions must report student payment data within 30 calendar days after the school makes a payment; or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Conditions and Contexts I noted the following conditions during my testing of the COD system: ? The PELL amount disbursed in the COD system did not agree to the students? billing statements for five (5) students out of one-hundred and thirty-eight (138) tested; ? The Direct loan amounts disbursed in the COD system did not agree to the students? billing statements for twenty-four (24) students out of one-hundred and thirty-eight (138) tested; ? The enrollment date was incorrectly reported in COD for eight (8) students out of one-hundred and thirty-eight (138) tested; ? The cost of attendance was incorrectly reported in the COD system for eighty-two (82) students out of one-hundred and thirty-eight (138) tested; and ? ABC is on HCM2 and must make disbursements to the students? account before the reimbursement payment request is submitted. The Direct loans amount was posted to the student?s account after the payment was made in COD for fifteen (15) students out of one-hundred and thirty-eight (138) students tested. Cause ABC failed to adhere to established procedures in reporting to the COD system. Questioned Costs For purposes of this condition, I have no questioned costs. Effect ABC has not complied with Title IV regulations that require proper and accurate recording to the COD system. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2018-005. Recommendation I recommend that ABC implement controls to ensure that information reported to the COD system is accurate.

Audit Finding Reference Number 2019 -003 - Common Origination and Disbursement (COD) System Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal Pell Grant Program (PELL) 84.268 Federal Direct Student Loan (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Management's Response Management concurs with this finding. ABC will implement controls to ensure that information reported to the COD system is accurate. ABC implemented PowerFAIDS Summer 2019. The PowerFAIDS COD reporting process exports files of federal award information that is transmitted to the COD system. The reporting will allow ABC to report the origination, disbursement, and updates to a student?s record. The PowerFAIDS processes examines student records to ensure they pass data validation rules. Person(s) Responsible: Director of Financial Aid, Financial Aid Staff Date of Implementation: In Progress

2018-005

Audit Finding Reference Number 2019 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria OMB 2 CFR 200, Subpart F Compliance Supplement, Part 5 Student Financial Assistance Programs, Section III Part N ? Special Tests and Provisions stipulate that disbursements to students must be made in accordance with required time frames. Title IV regulations 34 CFR 668.164 (e) specifies that whenever a school credits Student Financial Aid (SFA) program funds to a student?s account, and those funds exceed the student?s allowable charges, a SFA credit balance occurs. The school must pay the credit balance to the student as soon as possible, but no later than fourteen (14) days after the later of the date the balance occurred on the student?s account or the first day of classes of the payment period. Conditions and Contexts I noted during my audit the following conditions: ? Forty-eight (48) out of one-hundred and thirty-eight (138) students had student financial aid credit balances but ABC did not refund the credit balances to the students within the fourteen (14) day requirement; and ? One (1) student out of one-hundred and thirty-eight (138) students had student financial aid credit balances (excess funds) but ABC did not refund the excess funds to the student. Cause It appears that ABC did not ensure that the students received their refund checks within the prescribed time frame and not refunds be remitted until the Title IV aid is received. Questioned Costs For purposes of this condition, I have not questioned any costs. Effect ABC has not adhered to Title IV regulations regarding the disbursing of excess funds to students within a timely manner. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2018-006. Recommendation I recommend that management of ABC take immediate steps to ensure that students receive their refund checks within the required timeframes as required by Title IV regulations.

Audit Finding Reference Number 2019 - 004 - Student Credit Balance Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Management?s Response As per 34 CFR 668.167, management concurs with this finding. In order to improve compliance with Federal regulations while ensuring continuous improvement, as part of its Jenzabar EX implementation, ABC has partnered with Nelnet Campus Commerce to implement their electronic refund process. Students will be able to choose to receive funds through ACH, prepaid card, or paper check. Prompt refunds will be paired with text or email communication and payment/ID security. Person(s) Responsible: Vice President for Business and Finance\CFO, Vice President for Advancement, Title III, and Sponsored Programs, Chief Information Officer (CIO), Director of Financial Aid, Student Accounts Receivable Coordinator, and Jenzabar Project Manager Implementation Date: March 31, 2021

2018-006

Audit Finding Reference Number 2019 - 005 - Reconciliation of Title IV Accounts Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity None Criteria Volume 4, Chapter 6 of the 2018-2019 Federal Student Aid Handbook specifies that a school that participates in the Direct Loan program is required to reconcile cash received from the U.S. Department of Education?s Grant management system G5, to the actual disbursement records submitted to the Common Origination and Disbursement System on a monthly basis with a final year-end closeout annually. Conditions and Contexts I noted during my audit ABC did not complete an external reconciliation of the funds received in G5 to the funds disbursed in the Common Origination and Disbursement System and funds recorded in the University?s accounting records on a monthly or annual basis. In order to properly and effectively prepare the external reconciliation, ABC should complete an internal reconciliation between the business office and the student financial aid office. Cause Management of ABC did not adhere to established procedures which required monthly reconciliations between the business office, the student financial aid office, the G5 system, and the Common Origination and Disbursement System. Questioned Costs For purposes of the noted condition, I have not questioned any costs. Effect ABC is not in compliance with the reconciliation requirements of the Student Financial Aid Handbook. Repeat Finding Yes. See Schedule of Prior Year Audit Finding 2018-007. Recommendation I recommend that the student financial aid office and the business office work together to compare records of disbursed amounts and perform monthly and annual reconciliations.

Audit Finding Reference Number 2019 - 005 - Reconciliation of Title IV Accounts Federal Program and Specific Federal Award Identification CFDA Title and Number 84.063 Federal PELL Grant Program (PELL) 84.268 Federal Direct Student Loans (Direct) Federal Award Year June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity None Management?s Response As per 34 CFR 668.16 as well as 34 CFR 668, Subpart L, 668.171 through 668.175, Management concurs with this finding. Financial Aid Office and Business Office staff have met and designed a process in which to compare records of disbursed amounts and perform monthly and annual reconciliations. The Business Office and Financial Aid Office are currently in the process of hiring additional staff to assist with facilitating the process. In addition to hiring additional staff, both the Vice President of Business and Finance\CFO and Director of Financial Aid have sought to leverage technology in the process. The aforementioned individuals recently completed Jenzabar EX\PowerFAIDS reconciliation training to improve and expedite the process. Person(s) Responsible: Vice President of Business and Finance\CFO, Director of Financial Aid, Director of Human Resources, Jenzabar Project Manager Date of Implementation: October 1, 2020

2018-007

Audit Finding Reference Number Questioned Costs 2019 ? 006 ? Unsubsidized Annual Loan Limit/PLUS Denial $ 4,432 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loan (Direct) Federal Award Number June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Title IV regulations, 34 CFR 685.203 (b) stipulates that a dependent student may receive an additional unsubsidized loan in the amount of $2,000. Students whose parents are likely to be precluded by exceptional circumstances from receiving a PLUS loan may be eligible for an unsubsidized loan beyond the base amount of $2,000. Conditions and Contexts I noted during my audit, one (1) dependent student out of fifty-seven (57) tested received an unsubsidized loan in excess of the $2,000 annual limit without documentation of parental denial of a PLUS loan. Cause It appears that ABC did not ensure that the students were eligible to receive the loan proceeds. Questioned Costs For the purpose of this condition, I have questioned costs totaling $4,432 related to the Direct Loan program. Effect ABC has not adhered to Title IV regulations regarding the disbursing of loan funds in accordance with the regulations. Repeat Finding No. Recommendation I recommend that management ABC take immediate steps to ensure that students receive their loans funds as required by Title IV regulations.

Audit Finding Reference Number Questioned Costs 2019 ? 006 ? Unsubsidized Annual Loan Limit/PLUS Denial $ 4,432 Federal Program and Specific Federal Award Identification CFDA Title and Number 84.268 Federal Direct Student Loan (Direct) Federal Award Number June 30, 2019 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Management?s Response As per 34 CFR 685.203(c)(1)(ii), management concurs with this finding. In order to ensure compliance, we will utilize the PowerFAIDS system to track the receipt of PLUS Loan credit checks. Currently, the PowerFAIDS System will not allow a PLUS Loan Origination. We will also check COD to ensure the accuracy of a credit check decision. Peron(s) Responsible: Director of Financial Aid, Financial Aid Counselor Date of Implementation: October 2020

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