William Marsh Rice University

Finding 2024-001 – Loan Disbursement Notification Cluster: Student Financial Assistance Cluster Awarding Agency: Department of Education Award Name: Federal Direct Student Loans Award Year: July 1, 2023 – June 30, 2024 Assistance Listing Number: 84.268 Pass-through Entity: Not applicable Criteria Under 34 CFR 688.165 (a), except in the case of a post-withdrawal disbursement made in accordance with 34 CFR 668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal Perkins Loan, or TEACH Grant program funds, the institution must notify the student or parent of (i) the anticipated date and amount of the disbursement; (ii) the student's or parent's right to cancel all or a portion of that loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan proceeds or TEACH Grant proceeds returned to the Secretary; and, (iii) the procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement. The institution must provide the notice no earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account, if the institution obtains affirmative confirmation from the student. Condition Through testing of 25 individual federal student financial aid award disbursements, we selected 20 direct loan disbursements to students for testing. We noted that for all 20 selections, the students did not receive a notification containing: i) anticipated date and amount of the Direct Loan disbursement, ii) their right to cancel and, iii) the procedures and time by which the Direct Loan could be canceled. Cause The University relied on an automated process whereby the loan disbursement notice was to be sent one day after a loan disbursement posts to a student’s account. As a result of our audit procedures, the University identified the system rules that initiate the notice were not reinstalled after script updates were made, resulting in the notice not being sent to all Direct Loan recipients during the fiscal year. Effect If a student is not provided with timely notifications specific to Direct Loans, they may not be able to decline the funding, if they so choose, in a timely manner. Questioned Costs None. Recommendation We recommend management annually review the associated system rules to confirm notices will be sent as required. Management’s Views and Corrective Action Plan Management’s view and corrective action plan are included at the end of this report.

Section III?Federal Award Findings and Questioned Costs Finding 2022-001 ? E-sign Act Cluster: Student Financial Assistance Cluster Federal Awarding Agency: Department of Education Award Name: Federal Work Study Program, Federal Pell Grant Program, Federal Supplemental Education Opportunity Grants, Federal Perkins Loan, Federal Direct Student Loans Award Numbers: Not applicable Award Year: July 1, 2021 ? June 30, 2022 Assistance Listing Title: Federal Supplemental Educational Opportunity Grants, Federal Work-Study Program, Federal Perkins Loans, Federal Pell Grant Program and Federal Direct Student Loans Assistance Listing Number: 84.007, 84.033, 84.038, 84.063 and 84.268 Pass-through Entities: Not applicable Criteria The Electronic Signatures in Global and National Commerce Act (?E-Sign Act?) states that a school must obtain a student?s voluntary consent to participate in electronic transactions. Condition In examining 25 student records, we noted that the University requires each student annually agree to certain terms and conditions before they accept federal student assistance, however, a statement prompting the student to voluntarily consent to participate in electronic transactions was not included in the list of terms and conditions. Cause The University inadvertently omitted the statement prompting the student to voluntarily consent to participate in electronic transactions from the list of terms and conditions each student is required to accept. Effect A lack of student consent to participate in electronic transactions may result in the transactions being denied legal effect, validity, or enforceability solely because it is in electronic form or because an electronic signature or electronic record was used in its formation. Questioned Costs None noted. Recommendation We recommend the University add a statement that the student voluntarily consents to participating in electronic transactions to the list of terms and conditions annually agreed to by students receiving federal student financial assistance. Management?s View and Corrective Action Plan Management?s views and corrective action plan are included at the end of this report after the summary of status of prior audit findings.

2020-001: Sections 18004(a)(1) Institutional Portion, (a)(2), and (a)(3) Quarterly Public Reporting Cluster: Not applicable Agency: Department of Education Award Name: CARES Act Emergency Relief Funds - Higher Education Emergency Relief Fund (HEERF) - Institutional Portion Award Number: P425F204483 CFDA Title: COVID-19 - Education Stabilization Fund CFDA Number: 84.425F Award Year: 2020 Criteria Section 18004(a)(1) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires institutions of higher education to post a quarterly report depicting the use of the institutional portion of HEERF Funds (84.245F quarterly report form) no later than ten days after the end of each calendar quarter. Condition The University?s practice indicates that the quarterly report form should be approved by the Vice President for Finance and then posted on the website by the Deputy Director of Financial Aid. The population and also the audit sample contained one quarterly report form relating to the 2020 award year which was for the quarter ended December 31, 2020. The report was to be posted by January 10, 2021 and it was not posted until March 2, 2021. Cause While the University had procedures in place to ensure the report was completed, reviewed and submitted timely, the University had questions regarding the form, which resulted in the reporting delay. The University attempted to contact the Department of Education regarding their questions, however, they did not receive a response in time to meet the ten-day reporting deadline. Effect The quarterly report form was posted more than ten days after the end of a calendar quarter and information regarding the University's use of the institutional portion of HEERF Funds was not available to the public as intended by the federal rules. Recommendation We recommend the University implement additional procedures to ensure any questions regarding the form can be addressed in advance of the required posting date. Management?s Views and Corrective Action Plan Management?s response is included in ?Management?s Views and Corrective Action Plan? included at the end of this report after the summary schedule of status of prior audit findings.

Finding 2019-001: Procurement (Research and Development Cluster) Award Information Cluster: Research & Development (R&D) Agency: Various CFDA Number: Various Award Year: Various Criteria Uniform Guidance requires institutions of higher education to follow small purchase procedures for items that are below the simplified acquisition threshold ($250,000) but over the micro purchase threshold ($10,000). Small purchase procedures include obtaining price or rate quotations from an adequate number of qualified sources. The University policy requires three quotes or sole source documentation for purchases over $25,000. Condition In the audit sample of 25 procurement files, we found five purchases that were below $25,000 but over $10,000 for which only one price or rate quotation was obtained, and no sole source documentation was completed. Cause The University?s policy states that small purchase procedures should be followed for any purchases over the micro purchase threshold, however small purchase procedures and the micro purchase threshold were not clearly defined in the University?s policy, therefore University personnel sometimes defaulted to using $25,000 as the micro purchase threshold. Effect An adequate number of quotes were not sought or maintained for purchases below $25,000 that are subject to small purchase procedures, therefore the lowest priced suitable item may not have been procured in accordance with the Uniform Guidance. Recommendation We recommend the University policy be updated to clarify the micro purchase threshold and when small purchase procedures should be completed. Management?s Response Management?s Response is reported in ?Management?s Views and Corrective Action Plan? and is considered part of this report.