MCMURRY UNIVERSITYHigher Education

Inaccurate Return of Title IV Funds (R2T4) Significant Deficiency DEPARTMENT OF EDUCATION ALN #: 84.268 Federal Direct Loans and 84.063 Federal Pell Grants Federal Award Identification #: 2024-2025 Financial Aid Year Condition: When students withdrew either officially or unofficially, the University did not always calculate R2T4s accurately. Criteria: 34 CFR 668.22 Questioned Costs: $0 Context: Out of 15 withdrawals tested, 2 students had incorrect R2T4 calculations. 1 nontraditional student had incorrect institutional charges considered in the R2T4 calculation and an incorrect Pell amount initially included in the return calculation. This caused an over-return of $1,579 in FDL as Pell ended up being corrected. 1 modular student did not have both modules the student attended included in the total days used in the R2T4 calculation. When both modules were included, the student had completed past 60%, therefore, a return was not necessary. This caused an over-return of $534 in FDL. Cause: This was an oversight by the University. Effect: Incorrect amount of unearned Title IV funds returned. Identification as repeat finding, if applicable: See Finding 2024-003 Recommendation: We recommend an individual in financial aid with the appropriate level of experience periodically review R2T4 calculations and returns to help ensure that internal controls over such process can operate effectively and achieve compliance. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Inaccurate and Untimely Returns of Title IV Funds (R2T4) Material Weakness DEPARTMENT OF EDUCATION ALN #: 84.268, 84.063 and 84.007 Federal Award Identification #: 2023-2024 Award Year Condition: When students withdrew either officially or unofficially, the University did not always return unearned Title IV aid timely and return calculations were not done correctly consistently. Additionally, the University was not able to provide support of academic activity for some distance education students who had no passing grades to determine if they began attendance. Criteria: 34 CFR 668.22 Questioned Costs: $18,809 Context: Out of 22 students tested, 8 total students had errors: • 3 students had late returns totaling $7,776 in FDL and Pell. • 6 students had incorrect calculations resulting in $1,568 in FDL and Pell being under-returned and $76 in FDL being over-returned. • 3 distance education students did not have records of academic activity retained by the University. These students received $9,465 in FDL and Pell. These were not corrected during the audit. Cause: Misunderstanding of modular withdrawal R2T4 calculations. Additionally, the University switched systems used to administer distance education programs. Effect: Return of Title IV funds were not performed accurately and timely. Identification as repeat finding, if applicable: 2023-002 Recommendation: We recommend the University perform additional training on R2T4 regulations and implement a second review on R2T4 calculations performed. We also recommend the University retain academic activity for all distance education students without passing grades. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Gramm-Leach-Bliley Act (GLBA) Compliance Significant Deficiency DEPARTMENT OF EDUCATION ALN #: 84.268, 84.063, 84.007, 84.033, 84.038, and 84.379 Federal Award Identification #: 2023-2024 Award Year Condition: The University did not sufficiently comply with the updated requirements of GLBA. Criteria: 16 CFR 314.4 Questioned Costs: $0 Context: The University has not sufficiently documented its security risk assessment and safeguards, including financial aid applications, or implemented multi-factor authentication on all systems containing personally identifiable information (PII). Cause: The University has not allocated sufficient resources to address and document compliance with the requirements of GLBA. Effect: The University has not adequately addressed the requirements of GLBA, which may lead to unintended exposure of student information to security risks. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend the University allocate sufficient resources to address all requirements of GLBA. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Inaccurate TRIO Reporting DEPARTMENT OF EDUCATION ALN #: 84.042A Federal Award Identification #: P042A201146 Condition: The University did not report accurate information on key line items of the Annual Performance Report for all students. Criteria: 34 CFR 646.22(a) Questioned Costs: $0 Context: 10 out of 37 students tested had inaccurate information reported on key line items of the Annual Performance Report. Cause: This was an oversight by the University. Effect: Inaccurate information was reported on the Annual Performance Report. Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend the University have a review process to ensure each student's information is reconciled between the University's records and the system used to track TRIO participants and populate the Annual Performance Report. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Finding 2023-002 Federal Agency Name: U.S. Department of Education Program Name: Student Financial Assistance Cluster ALN: 84.268 and 84.063 Federal Award Number: P268K222290, P268K232290, P063P212290, P063P222290 Award Year: 2022-2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Compliance Requirement: Special Tests and Provisions – Return of Title IV Funds Criteria: Per 34 CFR 668.22(a), the University is required to have procedures in place to ensure unearned Title IV funds are correctly calculated and returned timely to the Department of Education. For unofficial withdrawals, the University is required to determine the student’s official date of withdrawal within 30 days of the student’s last date of attendance. According to volume 5 of the Federal Student Aid Handbook, for credit hour programs, institutionally scheduled breaks of five or more consecutive days are excluded from the R2T4 calculation as periods of nonattendance. They do not affect the calculation of the amount of Title IV aid earned. If a scheduled break occurs prior to a student’s withdrawal, all days between the last scheduled day of classes before a scheduled break and the first day classes resume are excluded from both the numerator and denominator in calculating the percentage of the term completed. If the withdrawal occurs prior to a scheduled break, the days in the break are excluded only from the denominator. Additionally, the University is required to return unearned funds for which it is responsible as soon as possible, but no later than 45 days after the date of determination of a student’s withdrawal. Condition: Out of a sample of 15 students who received Title IV funds and withdrew during the award year, 5 students had errors in their calculations. In the 5 student calculations, we noted one late determination of withdrawal date, three returns completed more than 45 days after the withdrawal date, two incorrect percentage of aid earned calculations, and an overpayment of $9 to the Department of Education. Cause: Due to turnover in student financial aid department staff, individuals responsible for Return to Title IV calculations were not able to complete certain calculations timely or accurately. The review control in place did not catch the related errors. Effect: The University may have temporarily kept funds that should have been returned to the Department of Education. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 15 students who received $98,738 in Title IV Aid and withdrew from the University, out of a population of 73 students who received $638,982 in Title IV aid and withdrew from the University. 5 of the students had errors in loan disbursement notification. These 5 students received $30,480 in Title IV aid (prior to the returns). Repeat Finding from Prior Year: No Recommendation: We recommend the University perform refresher training with all staff assigned to perform return to Title IV calculations. View of Responsible Officials: Management agrees with the finding. See Corrective action plan.

Finding 2023-003 Federal Agency Name: U.S. Department of Education Program Name: Student Financial Assistance Cluster ALN: 84.268 Federal Award Number: P268K222290, P268K232290 Award Year: 2022-2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Compliance Requirement: Special Tests and Provisions – Disbursements to or on Behalf of Students Criteria: Per 34 CFR 668.165(a), 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 the anticipated date and amount of the disbursement, the student or parent’s right to cancel all or a portion of the loan, and the procedures by which the institution must be notified if he or she wishes to cancel the loan. McMurry does not require students to provide affirmative confirmation of Title IV award amounts. Per 34 CFR 668.165(a), institutions that do not obtain affirmative confirmation of the accepted loan amounts must provide the aforementioned disbursement notice in writing no earlier than 30 days before, and no later than 7 days after, crediting the student's institutional account. Condition: We tested a sample of 60 students who received Title IV funds during the year. Of those students, we tested disbursement notification records for the students who received Direct Loans during the year. We noted errors in 39 student files. Students were either notified of Fall 2022 and Spring 2023 Direct Loan disbursements more than 7 days after their student accounts were credited with the disbursements, or received no notification of the student loan disbursement. Cause: Loan disbursement notifications are provided to a list of students following each round of aid disbursements. The list of students who require notification comes from a financial aid software report. Financial aid staff provide notifications based on the generated list. The University hired a new loan coordinator during the year under audit. The change in staffing resulted in missed and late student loan notifications. Effect: Certain students may have been temporarily unaware that they had Title IV funds applied to their account and available for their use. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 students who received $686,202 in Title IV Aid, out of a population of 953 students who received $9,993,184 in Title IV aid. 39 of the students had errors in loan disbursement notification. These students received $495,936 in Title IV aid. Repeat Finding from Prior Year: No Recommendation: We recommend the University perform refresher training with all staff assigned to perform loan disbursement notification procedures. View of Responsible Officials: Management agrees with the finding. See Corrective action plan.

Finding 2023-004 Federal Agency Name: U.S. Department of Education Program Name: Student Financial Assistance Cluster ALN: 84.007, 84.033, 84.063, 84.268 and 84.379 Federal Award Number: P007A224069, P033A224069, P063P212290, P063P222290, P268K222290, P268K232290, P379T222290, P379T232290 Award Year: 2022-2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Compliance Requirement: Special Tests and Provisions – Disbursements to or on Behalf of Students Criteria: Per 34 CFR 668.164(h), a Title IV credit balance occurs whenever the amount of Title IV program funds credited to a student’s ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. Credit balances must be paid directly to the student or parent as soon as possible, but no later than fourteen days after the balance occurred if the credit balance occurred after the first day of class. If the University retains the credit balance on the student account, the University must obtain the student or parent’s authorization prior to retaining the credit balance. Condition: We tested a sample of 60 students who received Title IV funds during the year. We noted four students with Title IV credit balances on their account, and no parent or student authorization of the retained credit balance. Cause: Student Financial Aid office policy did not require obtaining an authorization for retaining a credit balance on student accounts. Accordingly, staff did not obtain authorization for credit balances retained beyond fourteen days. Effect: In conjunction with the missing notifications in finding 2023-003, certain students may have been temporarily unaware that they had Title IV funds applied to their account and available for their use. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 students who received $686,202 in Title IV Aid, out of a population of 953 students who received $9,993,184 in Title IV aid. 4 of the students had unauthorized credit balances on their accounts. These students received $53,279 in Title IV aid. Repeat Finding from Prior Year: No Recommendation: We recommend the University update its Student Financial Aid and Business Office policy to require monitoring for Title IV credit balances and require authorization for credit balance retention to be signed for all students intending to leave Title IV aid balances on their accounts. View of Responsible Officials: Management agrees with the finding. See Corrective action plan.

Finding 2021-001 Federal Agency Name: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Financial Assistance Listing: 84.268 and 84.063 Federal Award Number: P268K212290, P268K202290, P063P202290, P063P192290, P063Q202290, P063Q192290 and P063Q182290 Award Year: 2020/2021 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Special Tests and Provisions ? Return of Title IV Funds Criteria: The University is required to have procedures in place to ensure unearned Title IV funds are correctly calculated and returned timely to the Department of Education. According to volume 5 of the Federal Student Aid Handbook (2020-21 Award Year edition), for credit hour programs, institutionally scheduled breaks of five or more consecutive days are excluded from the R2T4 calculation as periods of nonattendance. They do not affect the calculation of the amount of Title IV aid earned. If a scheduled break occurs prior to a student?s withdrawal, all days between the last scheduled day of classes before a scheduled break and the first day classes resume are excluded from both the numerator and denominator in calculating the percentage of the term completed. If the withdrawal occurs prior to a scheduled break, the days in the break are excluded only from the denominator. Additionally, the University is required to return unearned funds for which it is responsible as soon as possible, but no later than 45 days after the date of determination of a student?s withdrawal. Condition: Out of a sample of 13 students who received Title IV funds and withdrew during the award year, 5 students received unearned funds that were required to be returned to the Department. Two of the 5 returns were calculated incorrectly due to the improper exclusion of scheduled breaks greater than 5 days from percentage of completion calculations. Cause: Scheduled breaks greater than 5 days were incorrectly excluded from percentage of completion calculations (an early step in the Return to Title IV calculation). Period of enrollment length and number of completed days were correctly identified, but a staff member did not instruct the PowerFAIDS financial aid system to recalculate award amounts when the break days were recorded in the student?s R2T4 calculation. Additionally, the errors were not detected during the review process for Return to Title IV calculations. Effect: Incorrect percentage of completion calculations caused errors in the calculation of unearned Title IV aid amounts for two students. Accordingly, the Department of Education was overpaid by $95 for one student return and underpaid by $330 for a second student return. The underpayment indicates a late return for the second student. Questioned Costs: $235 Context/Sampling: A nonstatistical sample of 13 students out of 82 students who received Title IV aid and withdrew during the aid year was selected for Return to Title IV testing. Two (2) of the students tested had calculation errors. Repeat Finding from Prior Year: No Recommendation: We recommend that the University provide a Title IV calendar by period of enrollment to all staff involved in the calculation and review of Returns to Title IV. Additionally, we recommend that the percent of completion requirements from the SFA handbook be provided as a periodic refresher on R2T4 requirements. View of Responsible Officials: Management agrees with the finding. See corrective action plan.

Finding 2021-002 Federal Agency Name: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Financial Assistance Listing: 84.268, 84.033, 84.007, 84.063, 84.038, and 84.379 Federal Award Number: P268K212290, P268K202290, P033A204069, P007A204069, P063P202290, P063P192290, P063Q202290, P063Q192290, P063Q182290 and P379T212290 Award Year: 2020/2021 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Special Tests and Provisions ? Verification Criteria: Per the Internal Control ? Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the University is required to have procedures in place to ensure that the verification process is performed correctly. Condition: A sample of 60 students who received Title IV funds were tested for compliance with verification requirements. No verification errors were noted, but the University has no control in place to review completed verifications. Cause: The University has no verification review control in place. Effect: Errors in the verification process may not be prevented, or detected and corrected, and may result in incorrect aid disbursements to students. Questioned Costs: None reported. Context/Sampling: A sample of 60 students out of 899 students who received Title IV aid was selected for verification testing. Repeat Finding from Prior Year: No Recommendation: We recommend that the University implement a spot check review control over the verification process. For example, each month, two completed verifications could be reperformed by a staff member other than the original verifying employee to confirm accuracy of the results. View of Responsible Officials: Management agrees with the finding. See corrective action plan.

Finding 2020-001 Federal Program: U.S. Department of Education - Student Financial Assistance Cluster CFDA: 84.007, 84.033, 84.038, 84.063, 84.268, 84.379 Federal Award Number: P007A194069, P033A194069, P063P182290, P063P192290, P268K192290, P268K202290, P379T202290 Award Year: 2019/2020 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Special Tests and Provisions ? Verification Criteria: An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61 for verifying applicant information. The institution shall require each applicant whose application is selected by Department of Education to verify the information required for the Verification Tracking Group to which the applicant is assigned. Condition: We noted two students selected for verification whose submitted verification documentation (ie, tax transcripts) for education credits did not match education credits noted in the University?s student records. This did not result in a change in expected family contribution (EFC) or award amounts for the students affected. Cause: Both verifications were performed by the same employee who was undergoing training on verification processes at the time. Effect: The failure to adjust education credits in the student records did not affect the amount of aid that was awarded to the students affected. However, if other components of verified information were missed, student award amounts could be incorrectly calculated. Questioned Costs: $0 Context/Sampling: 40 of the University?s 1,023 Title IV aid recipients ($11,085,794 in total Title IV aid) were selected for testing. Of the 40 students ($547,845 in total Title IV aid), twelve students required verification. Of those 12 students, 2 had errors with the verification documentation for education credits not matching the University?s student records. Repeat Finding from Prior Year: No Recommendation: We recommend that procedures be reviewed to ensure that the University?s verification procedures are in compliance with federal requirements. Views of Responsible Individuals: Management agrees with the finding.

Finding 2020-002 Federal Program: U.S. Department of Education - Student Financial Assistance Cluster CFDA: 84.268, 84.379 Federal Award Number: P268K192290, P268K202290, P379T202290 Award Year: 2019/2020 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Special Tests and Provisions ? Disbursement to or on Behalf of Students ? Late Notification Criteria: The institution must notify the student, or parent, in writing of (1) the date and amount of the disbursement; (2) the student?s right, or parent?s right, to cancel all or a portion of that loan or loan disbursement and have the loan proceeds returned to the holder of that loan or the TEACH Grant payments returned to ED; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan, TEACH Grant, or TEACH Grant disbursement. The notification requirement for loan funds applies only if the funds are disbursed by EFT payment or master check (34 CFR 668.165). Institutions that implement an affirmative confirmation process (as described in 34 CFR 668.165 (a)(6)(i)) must make this notification to the student or parent no earlier than 30 days before, and no later than 30 days after, crediting the student?s account at the institution with Direct Loan or TEACH Grants. Institutions that do not implement an affirmative confirmation process must notify a student no earlier than 30 days before, but no later than 7 days after, crediting the student?s account and must give the student 30 days (instead of 14) to cancel all or part of the loan. Condition: We noted thirteen students were not notified of loan disbursements within the appropriate time frame. The notifications occurred but were 3-4 days late. Cause: All late notifications were performed by a single employee who no longer works for the University. Effect: Failure to ensure controls are in place over loan notifications could lead to students not wanting loan funds and receiving them. Questioned Costs: $0 Context/Sampling: Of the University?s 1,023 Title IV aid recipients ($11,085,794 in total Title IV aid), 40 students were tested for eligibility ($547,845 in total Title IV aid). Of those 40 students, 36 were awarded Federal Direct Loans and 3 were awarded TEACH grants. Thirteen (13) out of the 36 students tested with direct loan disbursements received late notifications. Repeat Finding from Prior Year: No Recommendation: We recommend that procedures be reviewed to ensure that loan disbursement notifications are made within the required time frame. Views of Responsible Individuals: Management agrees with the finding.

Federal Program: U.S. Department of Education - Student Financial Assistance Cluster CFDA: 84.268 Federal Award Number: P268K192290 Award Year: 2018/2019 Type of Finding: Significant Deficiency in Internal Control over Compliance Compliance Requirement: Special Tests and Provisions ? Return of Title IV Funds Criteria: The University is required to have procedures in place when a recipient of Title IV grant or loan assistance withdraws from the University during a payment period or period of enrollment in which the recipient began attendance, to determine the amount of Title IV aid earned by the student as of the student?s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution?s determination that the student withdrew, the difference must be returned to the Title IV programs within 45 days as outlined in this section and no additional disbursements may be made to the student for the payment period or period of enrollment. If the amount the student earned is greater than the amount disbursed, the difference between the amounts must be treated as a post-withdrawal disbursement as in accordance with 34 CFR sections 668.22(a)(1) through (a)(5). Condition: One student?s Title IV funds were returned after the 45 days from the determination of the student?s withdrawal. Cause: Properly designed internal controls over Return to Title IV calculation requirements were not followed as required by the University?s processes. Effect: By not following properly designed internal controls over Title IV calculation requirements, errors or omissions could occur affecting the timing of Title IV returned funds. Questioned Costs: $0 Context/Sampling: The University had just one student whose Title IV funds were required to be returned for the 2018-2019 fiscal year. We tested this student. Repeat Finding from Prior Year No Recommendation: We recommend that procedures be reviewed to ensure that Return to Title IV calculations and remittance of funds are performed timely. Views of Responsible Individuals: Management agrees with the finding.