SOUTHWESTERN CHRISTIAN COLLEGEHigher Education

Finding 2024-001 – U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (significant deficiency): Information on the Federal Program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grants Program, FAL No. 84.063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Federal regulations governing Title IV programs. Condition – Non-compliances were noted, as more fully described in the context below. Questioned Costs – $29,087 Context – We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs a) Documentation to support the College’s reconciliations of its Title IV programs between the Business Office and the Office of Financial Aid were not available. 34 CFR 685.300(b)(5). b) Four (4) out of 10 students did not have timely or accurate enrollment reporting to the National Student Loan Data System (NSLDS). 34 CFR 685.309(b). c) The College did not submit Federal Work-Study files for one (1) out of seven (7) students selected for testing. As a test of controls, we were unable to verify Federal Work-Study check endorsements against canceled checks. 34 CFR Part 675. d) Documentation to support student refund testing was not provided. 34 CFR 668.164(h)(1). e) The College did not submit verification documentation for three (3) out of 10 students selected for testing. 34 CFR 668.54 f) We were unable to fully test the Fiscal Operations Report and Application to Participate (FISAP) since the Title IV reconciliations were not provided. 34 CFR 674.19 Cause – Oversight by responsible employees. Effect – The College’s participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding – Yes Auditor’s Recommendation – The College should implement corrective actions to ensure that the above findings are resolved and will not recur in future periods. Views of Responsible Officials – Management shall prepare monthly reconciliations of the College’s Title IV programs between the Business Office and the Office of Financial Aid. In addition, copies of the Fiscal Operations Report and Application to Participate (FISAP) shall be retained and completed such that Title IV reconciliations can be fully tested. Accurate student enrollment information shall be maintained and reported to the National Student Loan Data System (NSLDS). Federal Work-Study files shall be maintained for all Work-Study students. Complete student refund documentation shall be maintained for all applicable students. Required FAFSA verification documentation shall be obtained and retained for all applicable students. Management of the College will work to implement corrective actions to ensure that the above findings will not recur in future periods.

Finding 2024-002 – U.S. Department of Education (USDE) Higher Education Emergency Relief Fund (HEERF) Programs (significant deficiency): Information on the Federal Programs – HEERF Historically Black Colleges and Universities (HBCU), 18004(a)(2), FAL No. 84.425J, June 30, 2024. Criteria – Federal regulations: CARES Act 18004(e), CRRSAA 314(e), 2 CFR 200.328, 2 CFR 200.329, 34 CFR 75.720(b). Condition – Non-compliance noted regarding untimely filing of quarterly and annual report. Questioned Costs – Noted within each finding below. Context – We noted the following in connection with our testing of compliance: a) Our review of the required quarterly and annual report submissions revealed the College failed to submit the annual performance report, and one (1) quarterly report was submitted untimely. Cause – Administrative oversight. Effect – Reporting deadlines were missed. Repeat Finding – No. Auditor’s Recommendation – The College should strengthen controls and oversight over grant reporting to assure that all reporting requirements are being met accurately and timely. Views of Responsible Officials – The HEERF department and reporting systems were closed, and Grants personnel were unable to retrieve a copy of the required reports from the ESF Data Collection System by the suggested deadline of May 19, 2025. A reporting calendar was implemented in August 2025 along with other policies and procedures outlined in the corrective action plan attached. All future reports will be submitted timely under this protocol.

Finding 2023-001 - U.S. Department of Education (USDEJ. Title IV Student Financial Aid Programs (Deficiency): Information on the federal program: Federal Direct Student Loans, Assistance Listing No. 84. 268, June 30, 2023; Federal Pell Grants Program, Assistance Listing No. 84. 063, June 30, 2023; Federal Supplemental Educational Opportunity Grant, Assistance Listing No. 84. 007, June 30, 2023; Federal Work-Study Program, Assistance Listing No. 84. 033, June 30, 2023. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs - $9,415. Context- We observed the following condition in connection with our testing of the various USDE, Title IV, Student Financial Assistance Programs. a) One (1) out of 15 files tested were missing official transcripts. The total questioned costs $9,415. 34 CFR 668.32 Cause - Oversight by responsible employees. Effect- The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding- Yes. Auditor's Recommendation - The College should implement corrective actions to ensure the above finding is resolved and will not recur in future periods.

Finding 2023-002 – U.S. Department of Education (USDE) Higher Education Emergency Relief Fund (HEERF) Programs (material weakness): Information on the federal programs – HEERF Student Aid Portion 18004(a)(1), Assistance Listing No. 84.425E, June 30, 2023; HEERF Institutional Portion 18004(a)(1), Assistance Listing No. 84.425F, June 30, 2023; and HEERF Historically Black Colleges and Universities (HBCU) 18004(a)(2), Assistance Listing No. 84.425J, June 30, 2023. Criteria – Federal regulations relative to HEERF 18004(a)(1) and (2). Condition – Several non-compliances were noted and considered material given the amount of questioned costs. Questioned Costs – Construction and Renovation Costs was $3.6 million. Total Salaries and contractual services was $1.3 million (subsequently reclassified $317,000). Context – We observed the following conditions in connection with our testing of the various USDE, HEERF programs: a) The College did not obtain required approval before incurring costs from the HEERF HBCU grant on construction and renovation costs. Federal regulations under HEERF (a)(2) stipulates prior-approval from USDE for all construction and renovations projects must be received before commencing any bidding or incurring construction costs. The College incurred and capitalized construction and renovation costs funded by the HEERF HBCU grant totaling $3.6 million in fiscal year 2023. b) There were several construction and renovation costs incurred for the Health and Wellness Center such as roof replacement, HVAC unit replacement, etc. The Health and Wellness Center houses the gymnasium where athletic events are held. There was no allocable method provided to delineate which area benefitted from the project costs suggesting unallowed costs may have been incurred regarding the gymnasium space. Federal regulations under HEERF (a)(2) explicitly prohibits construction and renovation of athletic facilities, sectarian instruction or religious worship. c) A number of salaries and contractual services charged to the HEERF HBCU grant appeared to involve responsibilities and services not solely dedicated to the grant. Various positions within the business office were charged to the grant at 100% rate based on time and effort reports examined during testing. A portion of these expenses were subsequently reclassified to operational costs totaling $317,000 out of $1.3 million. Additionally, the full compensation for the director of another active grant was charged to the HEERF HBCU grant. Besides conflicting roles, discerning the allocation of costs associated with COVID-19 prevention, preparation, and response was not consistently apparent. Cause – Unfamiliarity or misinterpretation of Federal regulations. Effect – Incurred costs could be disallowed and funds required to be reimbursed back to the Federal government. Repeat Finding – No. Auditor’s Recommendation – The College should provide grant-compliant justification to substantiate the questioned costs as a resolution to this matter. A representative at USDE may offer some insight and consideration on retrospective approvals for construction and renovation projects. Also, the specific purpose for all salaries and contractual services charged to the HEERF grants should be documented for better clarity. Views of Responsible Officials – Procedures will be implemented to assure Federal Regulations are properly followed such that HEERF HBCU pre-approvals are obtained from the USdE for all construction and renovation projects. In addition, construction and renovation costs associated with the Health and Wellness Center will be adequately documented to better distinguish them from gymnasium-related expenditures. Time and effort reporting procedures will be more closely monitored for accurate documentation and segregation of unallowable costs from allowable costs. Contact will made to USDE specifically to remedy the disclosed findings noted above.

Finding 2022-002 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (material weakness}: Information on the federal program: Federal Pell Grants Program, AL No. 84.063, June 30, 2022; Federal Supplemental Educational Opportunity Grant, AL No. 84.007, June 30, 2022; Federal Work-Study Program, AL No. 84.033, June 30, 2022. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs-As provided below. Context- We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs. a) Two (2) out of six (6) Federal Work-Study students' files tested were missing identification cards with a questioned cost of $14,035. b) Two (2) out of 20 students tested had missing official transcripts with a questioned cost of $8,511. c) The College was unable to provide enrollment history in order to adequately test withdrawals and determine whether funds should have been returned to the government. Cause - Oversight by responsible employees. Effect - The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding - No. Auditor's Recommendation - The College should implement corrective actions to ensure that the above findings are resolved and will not recur in future periods."Views of Responsible Officials - Management will implement procedures to ensure Federal Work-Study students' files are reviewed and ensure that student files are properly completed and maintained, including inclusion of identification cards, official transcripts, and enrollment histories.

Finding 2022-003 - U.S. Department of Education (USDE), Education Stabilization Fund (ESF) Higher Education Emergency Relief Fund (HEERF) (Material Weakness): Information on the federal program - HEERF Student Aid Portion, AL No. 84.425E, June 30, 2022; HEERF Institutional Portion, AL No. 84.425F, June 30, 2022; HEERF Historically Black Colleges and University's (HBCUs), AL No. 84.425J, June 30, 2022 Criteria - Federal regulations governing HEERF funding. Condition - We noted material weaknesses in the testing of expenditures under the HEERF funding received by the College. Questioned Costs - $73,115. Context- We observed the following during our testing of compliance with HEERF expenditures: Four (4) employees were paid bonuses totaling $21,000 which are unallowable costs under the HEERF program. Two (2) expenditures totaling $43,265 were missing the competitive bidding or explanation of selection for the contractor. One (1) disbursement package totaling $1,300 was not provided. The College erroneously recorded $7,550 in expenditures to HEERF that were for operations and another grant. College proposed an entry to reclass the expenditures; however, these amounts were included in the drawdown requests made during the year. Cause - It appears the above instance resulted in staff not properly following through with its procurement policies and following the guidelines of allowable activities and cost governing the Institutional and HBCU portions for the HEERF funding. Effect - Instances of noncompliance of the above regulations may result in sanctions being imposed or repayment for unallowable costs. Repeat Finding - No. Auditor's Recommendation - We recommend that the College review the HEERF funding requirements and ensure all staff members are familiar with the requirements to avoid incurring a liability to the U.S. Department of Education for non-compliance. Measures should be taken to specifically remedy the above findings. Views of Responsible Officials - Management will implement procedures to properly review HEERF expenditures and ensure proper compliance for exclusion on unallowable costs, presence of proper documentation of expenditures, including inclusion of com- petitive bids. Management will also implement procedures to ensure proper entry and review of the classification of grant expenditures.

Finding 2021-001 ? U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (significant deficiency): Information on the federal program: Federal Direct Student Loans, CFDA No. 84.268, June 30, 2021; Federal Pell Grants Program, CFDA No. 84.063, June 30, 2021; Federal Work-Study Program, CFDA No. 84.033; June 30, 2021; Federal Supplemental Education Opportunity Grant, CFDA No. 84.007; June 30, 2021 Criteria ? Federal regulations governing Title IV programs. Condition ? Non-compliances were noted, as more fully described in the context below. Questioned Costs ? As provided below. Context ? The College did not provide sufficient reconciliations for Federal student financial aid awards including Pell Grants, Direct loans, SEOG and Work-Study programs suggesting that the student financial aid and business offices did not reconcile on a monthly basis. Cause ? Oversight by responsible employees. Effect ? The College?s participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding ? Yes. Auditor?s Recommendation ? Although the College has made an concerted effort to implement corrective actions for prior year findings, we strongly recommend the College perform monthly reconciliations of Title IV funds between the Business and Financial Aid offices. View of Responsible Officials ? The College hired a new Title IV and Financial Aid Director in May 2020. Steps have been implemented to prepare monthly reconciliations of Title IV funds, with coordinated efforts between the Business and Financial Aid Offices.

Finding 2020-002 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (significant deficiency): Information on the federal program: Federal Direct Student Loans, CFDA No. 84.268, June 30, 2020; Federal Pell Grants Program, CFDA No. 84.063, June 30, 2020; Federal Work-Study Program, CFDA No. 84. 033; June 30, 2020; Federal Supplemental Education Opportunity Grant, CFDA No. 84.007; June 30, 2020 Criteria - Federal regulations governing Title IV programs. Condition - Numerous non-compliances were noted, as more fully described in the context below. Questioned Costs -As provided below. Context- We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs. a) Two (2) out of five (5) students tested R2T4 funds were not returned within the required 45 days. b) The College did not reconcile its student financial aid programs (federal) on a timely basis. c) During our initial request, the College did not submit student refund checks for testing. d) The College prepared the FISAP with unreconciled data for the Federal Pell Grant and Federal Work Study Programs. Cause - Oversight by responsible employees. Effect - The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding- Yes. Auditor's Recommendation - Although the College made significant personnel changes in the financial aid office during the fiscal year, the College should implement corrective actions to ensure that the above findings are resolved with the new personnel and will not recur in future periods. View of Responsible Officials - a) The College concurs with this finding. The institution will take corrective actions to remedy the condition noted. b) The College is currently under the Heightened Cash Monitoring (HCM2) cash management arrangement. Title IV funds from 2019-20 are still in the process of being requested and received. Also, under HCM2, the institution must disburse its own funds first and then submit claims to the Dept. of Education in order to be reimbursed for student financial aid funds. This circumstance creates an ongoing situation whereby disbursements to student accounts, at any moment, are more than federal funds received. The HCM2 claims process can take up to 30 days. During this interim period, the College must allow the credited financial aid to remain on the account. If a claim is rejected for any reason, it results in more delays in the receipt of funding. c) The College submitted documents based upon the auditor's test of transaction sample requested. d) FISAP preparation. ? The College prepared the FISAP based upon Pell data from COD for the 2019-20 year at the time of the FISAP preparation. Student awards were adjusted to agree with accepted COD records at that time. However, COD records are constantly changing for the 2019- 20 year as HCM2 batches are processed. According to our DOE program analyst, this is not common. It is likely that there will be more adjustments made as funds are still in process of being requested. ? FCWS, being a campus based program had no reconciling data from COD. However, the institution awarded FCWS & SEOG within the allocations provided by DOE to Include the allowable transfer of FCWS to SEOG. An institution is allowed to award the full SEOG Awards plus 25% of the College Work-study Award. A schedule showing the initial SEOG Award and 25% transfer from FCWS was documented on the FISAP supporting student record schedules. FCWS actual earnings were reconciled and documented. Any changes in FCWS or SEOG awards and disbursement records would be caused by a record being subsequently rejected for reasons not known to the institution at the time of FISAP preparation ? Per COVID 19 Title IV Flexibilities and Waivers as of January 15, 2021 as updated, the Dept. of Ed. permits the transfer of 100% of FWS funds to SEOG. The 2019-20 year was the 1st year the institution was under HCM2. The institution is taking advantage of trainings offered by the Minority Serving & Under Resourced Schools Division (MSURSD) and FSA in order to provide greater assurances of compliance. 17