TEXAS COLLEGE

Finding 2025-01 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Reconcile Title IV Programs and Use of Unreconciled Data in FISAP Reporting (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.24 (a), institutions must maintain records necessary to demonstrate compliance with the requirements of Title IV of the Higher Education Act (HEA) programs, including records that support the accuracy of disbursements and fiscal transactions. Per the Federal Student Aid Handbook, Volume 4 – Processing Aid and Managing Funds, institutions are required to reconcile internal disbursement and expenditure records with the Business Office, general ledger, and the Department of Education’s systems (COD, G5, etc.) on a monthly basis for all Title IV programs. For Federal Direct Loans specifically, per 34 CFR § 685.300(b)(5), institutions must reconcile the institution’s Federal Direct Loan records with the Department’s records at least monthly and resolve any discrepancies. Additionally, per FISAP Instructions, institutions must ensure that all data reported on the Fiscal Operations Report and Application to Participate (FISAP) are accurate, supported, and reconciled to institutional records. Condition – It was noted that the College did not perform the required reconciliations between: a. The Student Financial Aid (SFA) Office records, b. The Business Office/General Ledger (SEFA), and c. The Common Origination and Disbursement (COD) System. In addition, unreconciled figures from the institution’s internal records were used in preparing and submitting the Fiscal Operations Report and Application to Participate (FISAP) submitted to the U.S. Department of Education for the most recent award year. As a result, the institution could not demonstrate that Title IV activity reported to ED was accurate or fully supported at the time of testing. Subsequent to the identification of this exception, management provided additional documentation intended to support reconciliation activities; however, the documentation did not demonstrate that reconciliations were performed timely or as part of established internal control procedures during the period under audit. Cause – The lack of reconciliation appears to have resulted from insufficient coordination and reconciliation timeliness between the Office of Financial Aid and the Business Office. Effect – Failure to reconcile may impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory review, questioned costs, and potential repayment liability. There is also an increased risk of overpayments or underpayments of federal aid and misstatements in the Schedule of Expenditures of Federal Awards (SEFA) and general ledger. Questioned Costs - $0 Perspective – Reconciliation is a foundational internal control for Title IV program administration. The failure to reconcile across all four major programs indicates a systemic, not isolated, weakness in financial aid and accounting oversight. In this instance, the College did not perform the required reconciliations and subsequently relied on unreconciled internal records to prepare and submit the Fiscal Operations Report and Application to Participate (FISAP) to the U.S. Department of Education. As a result, the College could not demonstrate that Title IV activity reported to ED was accurate, complete, or supported. Repeat Finding – Yes Auditor’s Recommendation – The College should implement monthly reconciliations, strengthen crossdepartment coordination, perform year end reconciliation prior to FISAP submission. Implementation of these measures will help ensure compliance with federal regulations, reduce financial reporting risk, and reinforce the College’s administrative capability. Management Response – Beginning with future monthly Title IV reconciliations, the Institution will complete all required reconciliations no later than five (5) days after the COD reconciliation reports are made available. The Financial Aid Office will provide the reports to the Business Office for reconciliation. Following reconciliation by the Business Office, the reports will be returned to the Financial Aid Office when resolution of discrepancies is required. Once discrepancies are resolved, the Financial Aid Office will submit the updated reports back to the Business Office, and the resolution will be documented. If no resolution is required, the reports will be retained for the applicable month. All monthly reconciliations will be maintained and made available for review during the year-end audit by the Business Office. Responsible Officials - The Financial Aid Office under the direction of the Vice President of Student Affairs plans to have the finding resolved by its next fiscal year end audit (between July – October 2026). The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding.

Finding 2025-02 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - ISIR Comment Code Not Resolved Prior to Disbursement (significant deficiency): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – The Higher Education Act (HEA) § 480(d)(8) states that a student may be considered independent if the student is determined to be an unaccompanied homeless youth or at risk of homelessness. Institutions must collect and retain documentation supporting the determination. 34 CFR § 668.2 – Defines an unaccompanied homeless youth and establishes eligibility criteria for independent student status under Title IV. 34 CFR § 668.16(f) – Institutions must demonstrate the administrative capability to properly administer Title IV programs, including ensuring that all eligibility and dependency determinations are resolved and documented prior to disbursing Title IV funds. 34 CFR § 668.54(a)(3) and § 668.55(a) – Institutions must obtain and review documentation necessary to resolve information identified by the Secretary, including ISIR comment codes and rejects, before awarding or disbursing Title IV aid. Federal Student Aid Handbook – For ISIRs with Comment Code 325 (Reject 01), the Financial Aid Administrator (FAA) must collect documentation from an authorized entity or make a documented FAA determination of the student’s unaccompanied homeless youth status before Title IV funds may be disbursed. Condition – Based on documentation provided for the 2024–2025 award year, the College disbursed Title IV funds to a student whose ISIR contained Comment Code 325, indicating that the student’s unaccompanied homeless youth status required resolution prior to awarding and disbursing aid. The College did not provide documentation from an authorized entity, nor evidence of a documented Financial Aid Administrator case-by-case determination, to support the student’s independent status. As a result, the student’s dependency status remained unresolved at the time Title IV funds were disbursed. Cause – The condition appears to have resulted from failure to identify ISIR Comment Code 325 as a reject code requiring resolution prior to disbursement and insufficient internal controls to prevent disbursement of Title IV funds when dependency status determinations remain unresolved. Effect – Title IV funds were disbursed without confirmation of student eligibility, resulting in $19,895 in questioned costs. Disbursing aid prior to resolving a required homeless youth determination places the College out of compliance with federal eligibility, verification, and administrative capability requirements. The College may be required to return improperly disbursed funds to the Department of Education. Questioned Costs - $19,895 PELL SUBSIDIZED UNSUBSIDIZED $7,395 $5,500 $7,000 Perspective – ISIR Comment Code 325 represents a mandatory eligibility determination related to a student’s dependency status. Because dependency status directly affects Title IV eligibility and award calculations, failure to resolve this comment code prior to disbursement constitutes a significant compliance deficiency. In this instance, one (1) out of sixty (60) students tested (1.7%) was awarded and disbursed Title IV funds without resolution of ISIR Comment Code 325, which required documentation of unaccompanied homeless youth status or a documented Financial Aid Administrator determination prior to disbursement. Repeat Finding – No Auditor’s Recommendation – We recommend that the College strengthen its procedures for identifying and resolving ISIR Comment Codes related to unaccompanied homeless youth determinations. Specifically, the College should: a. Establish written procedures for homeless youth determinations. b. Require documentation prior to disbursement. c. Implement a secondary review process. d. Enhance system controls and monitoring. Management’s Response – Although a recommendation was noted, the Financial Aid Management System (FAMS) was not programmed as expected for the 2024–2025 FAFSA application year. The issue was anticipated to be addressed by the third-party vendor through system updates; however, because of the programming oversight, no system flag was generated to request self-supporting documentation or validation of a student’s homelessness or risk of homelessness. In addition, the Department of Education’s FAFSA application did not generate a comment code requiring further action on the student’s record. The Institution has since worked with its third-party vendor to correct the programming oversight to ensure that required documentation is requested for students who indicate homelessness or risk of homelessness. Additionally, at the direction of the FAMS vendor, the Financial Aid Office implemented an internal edit to ensure a system flag alerts staff when documentation is required to resolve such cases. With these corrections, the conditions that caused the error have been addressed. Responsible Officials - The Financial Aid Office under the direction of the Vice President of Student Affairs plans to have the finding resolved by its next fiscal year end audit (between July – October 2026). To ensure ongoing compliance, the Financial Aid Office will monitor student records for appropriate flags and required documentation. The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding.

Finding 2025-03 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Untimely Release of Title IV Credit Balances (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must Pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs. Condition – During testing of student account activity, we identified that nine (9) out of sixty (60) sampled students had Title IV–created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the College’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs – $0 Perspective – Title IV credit balance requirements are considered a high-risk compliance area because they involve the timely handling of federal funds owed directly to students. In this instance, nine (9) out of sixty (60) students tested (15%) were found to have Title IV–created credit balances that were not released within the required 14-day timeframe. This failure rate indicates that the delays were not isolated timing errors but rather reflect a systemic weakness in the College’s Title IV cash management controls. Repeat Finding – No Auditor’s Recommendation – The College should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. Management’s Response – The College accepts the recommendation. The institution has reviewed the audit finding and acknowledges that student refunds were not consistently issued within the required 14-day timeframe due to students’ incomplete admissions requirements. The institution recognizes this as a compliance deficiency and has implemented revised processes and internal controls to ensure timely and compliant issuance of student refunds going forward. Under the revised refund process, the Business Office staff identify student credit balances and prepare refund requests. These requests are reviewed by the Registrar’s Office to reconfirm when admission requirements have been met and by the Financial Aid Office to confirm that federal student aid has been properly originated and disbursed through the Common Origination and Disbursement (COD) system. If it is determined that a student’s admissions requirements are incomplete and a refund has been created, the Business Office notifies the Financial Aid Office to cancel all applicable federal student aid and return the funds to the U.S. Department of Education through COD. When a student’s admissions requirements have been met, then the Business Office completes the refund process by transmitting the approved refund file to the institution’s third-party refund vendor and submitting funds for release to students. These revised procedures strengthen oversight, improve interdepartmental coordination, and ensure compliance with federal refund timelines. College administrators for each department (Vice President for Student Affairs and Vice President for Business and Finance) will be responsible for informing staff of changes in campus operations that may have an impact on their ability to process refunds. View of Responsible Officials – The College agrees with the finding.

Finding 2025-04 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Failure to Provide Student-Level Documentation to Support FISAP Reporting (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.24(a) (Recordkeeping Requirements), an institution must maintain and make available for review, records necessary to demonstrate compliance with the Title IV, HEA program requirements. This includes student-level records, such as ISIRs and related eligibility documentation, that support federal reporting, including data submitted on the FISAP. Condition – The College did not provide the requested student-level records (ISIRs) to substantiate the number of eligible applicants reported on the FISAP submitted to the U.S. Department of Education. As a result, we were unable to verify the accuracy and completeness of the eligible applicant data reported for the applicable award year. Subsequent to audit inquiry, the institution provided student-level documentation, including ISIRs, to support FISAP reporting. Upon review of the documentation provided, testing identified that one (1) out of seven (7) students included in one FISAP dependency/income grid did not align with the applicable dependency model based on their ISIRs. As a result, the institution updated its supporting records to address the identified misclassification within the tested grid. Cause – The condition appears to have resulted from inadequate record retention or retrieval practices for student-level documentation, lack of a defined process to respond to audit requests for FISAPsupporting documentation, and insufficient understanding of the requirement to retain and provide documentation supporting federal reporting. Effect – The accuracy and completeness of FISAP-reported eligible applicant data could not be verified, the College was not in compliance with Title IV recordkeeping requirements, and the inability to substantiate reported data increases the risk of Inaccurate federal reporting and program review findings. Questioned Costs – $0 Perspective – The FISAP is a certified federal report relied upon by the Department of Education to assess institutional participation and funding eligibility for Title IV programs. Failure to provide student-level documentation to support reported eligible applicants represents a systemic documentation and internal control deficiency, rather than an isolated oversight. Without access to ISIRs and related records, the College cannot demonstrate that FISAP-reported data are accurate, complete, or supported, which undermines the reliability of federal reporting. Repeat Finding – No Auditor’s Recommendation – We recommend that the College strengthen its record retention and documentation controls to ensure that all student-level records supporting data reported on the Fiscal Operations Report and Application to Participate (FISAP), including Institutional Student Information Records (ISIRs), are maintained, readily retrievable, and made available for audit and review purposes in accordance with federal recordkeeping requirements. Management’s Response – The institution acknowledges that this request was initially overlooked during the audit review. The requested sample testing of ISIRs has now been completed, and a total of 34 ISIR records have been provided and uploaded to the shared file for the auditor’s review. The institution respectfully requests a formal update to this finding (if applicable), once all submitted ISIR documents have been reviewed and deemed acceptable by the auditor. Responsible Officials - The Financial Aid Office under the direction of the Vice President of Student Affairs plans (to have the finding resolved by its next fiscal year end audit (between July – October 2026). The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding.

Finding 2025-05 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Untimely Return of Unearned Title IV Funds (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 668.22 (j), (1) institutions must return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the College’s determination that the student withdrew. Condition – Testing of student withdrawals revealed that for three (3) students, Title IV funds identified as unearned through the Return of Title IV (R2T4) process were not returned to the U.S. Department of Education within the required timeframe. The returns were made between 209 and 349 days after the College’s date of determination (DOD), which is well beyond the 45-day requirement established by federal regulations. Cause – The condition appears to have resulted from failure to monitor and track the 45-day R2T4 return deadline, inadequate coordination between the Financial Aid Office and the Business Office regarding the processing and return of unearned funds, and insufficient supervisory review to ensure R2T4 refunds were completed timely. Effect – The College was not in compliance with federal R2T4 return requirements. Untimely returns reflect weaknesses in the College’s internal control over Title IV administration and may affect administrative capability under 34 CFR § 668.16. Questioned Costs – $0 Perspective – Returning unearned Title IV funds within 45 days is a core compliance requirement. Institutions must demonstrate the ability to promptly identify withdrawals, calculate R2T4 amounts, and process returns to maintain eligibility for participation in Title IV programs. In this instance, three (3) out of sixty (60) students tested (5%) had unearned Title IV funds that were not returned within the required 45-day timeframe. The delays ranged from 209 to 349 days after the College’s date of determination, representing returns that were more than four to seven times later than allowed under federal regulations. Repeat Finding – No Auditor’s Recommendation – The College should implement a formal R2T4 tracking system and strengthen coordination between departments. Management’s Response – The Institution has reviewed the finding and acknowledges that one student record was not submitted for review. The Institution has provided the NSLDS enrollment verification for that student. For the remaining two students, enrollment reporting was not updated within the required 30-day timeframe. The Institution has since updated their enrollment statuses in NSLDS and has provided updated records for review. The Institution respectfully requests that the finding be formally updated, if applicable, upon the auditor’s review and acceptance of all submitted NSLDS enrollment documentation. In response, the institution has updated its processes and procedures regarding student enrollment reporting with NSLDS, by ensuring accurate enrollments status matches the student transcript. Along with continuing to update within the 30 days established timeframe within NSLDS. Responsible Officials -The Registrar, the Financial Aid Office under the direction of the Vice President of Student Affairs, and Business Office under the direction of the Vice President for Business and Finance plan to have the finding resolved by its next fiscal year end audit (between July – October 2026). The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding.

Finding 2025-06 - U.S. Department of Education (ED), Title IV Student Financial Aid Programs - Inaccurate and Incomplete Enrollment Reporting to the National Student Loan Data System (NSLDS) (significant deficiency) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2025; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2025; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025. Criteria – Per 34 CFR § 685.309(b) and 34 CFR § 690.83, institutions are required to report accurate and timely student enrollment information to National Student Loan Data System (NSLDS). The enrollment information must reflect each student’s current enrollment status and must be submitted within 60 days of any change in student status or in accordance with the schedule established by the U.S. Department of Education. Condition – During review of enrollment reporting procedures, we noted that one (1) student record requested for testing was not provided, and two (2) sampled student records were not updated to reflect current enrollment status changes in NSLDS. As a result, the institution could not demonstrate that enrollment reporting was complete, accurate, or timely for the students tested. Subsequent to audit inquiry, the institution provided the requested student record and updated the enrollment status for the two (2) students identified during testing. The institution’s actions corrected the identified records following notification of the exception. Cause – It appears that the exception occurred because the College did not have adequate monitoring procedures in place to ensure compliance for updating and reconciling enrollment changes between the registrar’s system and the NSLDS submission system. Effect – Failure to accurately and timely report student enrollment statuses can result in incorrect loan deferment or grace period tracking for affected borrowers, potential early loan repayment obligations for students who are no longer enrolled, and findings in federal program reviews or compliance audits. There are also an increased risk of administrative capability concerns under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Accurate enrollment reporting is critical because it directly affects borrowers’ repayment obligations and loan servicing timelines. In this instance, three (3) out of six (6) students tested (50%) had enrollment reporting issues, including the inability to provide one requested student record and failure to update enrollment status changes for two additional students. This high error rate indicates that enrollment reporting controls are not operating effectively. The Department of Education treats even single enrollment reporting failures as substantial because they disproportionately impact borrower rights and federal loan servicing. Repeat Finding – No Auditor’s Recommendation – The College should establish a formal reconciliation process to verify all student status changes are reported timely as well as conduct periodic reviews to ensure the accuracy of student status data. Management’s Response – The Institution has reviewed the finding and acknowledges that one student record was not submitted for review. The Institution has provided the NSLDS enrollment verification for that student. For the remaining two students, enrollment reporting was not updated within the required 30-day timeframe. The Institution has since updated their enrollment statuses in NSLDS and has provided updated records for review. The Institution respectfully requests that the finding be formally updated, if applicable, upon the auditor’s review and acceptance of all submitted NSLDS enrollment documentation. In response, the institution has updated its processes and procedures regarding student enrollment reporting with NSLDS, by ensuring accurate enrollments status matches the student transcript. Along with continuing to update within the 30 days established timeframe within NSLDS. Responsible Officials -The Registrar, the Financial Aid Office under the direction of the Vice President of Student Affairs, and Business Office under the direction of the Vice President for Business and Finance plans to have the finding resolved by its next fiscal year end audit (between July – October 2026). The College is aware of the need to review and mitigate compliance risks in this area and will use the described corrective action plan to reduce those risks and eliminate the potential for future audit findings. View of Responsible Officials – The College agrees with the finding

Finding 2024-001 – U.S. Department of Commerce (significant deficiency): Information on the federal program: Connecting Minority Communities (CMC) in Smith County, FAL No. 11.028, June 30, 2024 Criteria – Federal regulations governing Connecting Minority Communities programs. Condition – Noncompliances were noted, as more fully described in the context below. Questioned Costs – $13,309 Context – We noted the following in connection with our compliance testing of time and effort reports: a) We noticed that nine (9) of 18 time and effort reports tested had incomplete and/or inaccurate percentage calculations. b) Personnel Action Forms provided for six (6) of 18 time and effort reports did not specify pay allocations for employee salaries to the grant. c) The employee signature on three (3) time and effort reports provided for one (1) employee did not appear authentic. d) Three (3) time and effort reports provided for one (1) employee were not approved by a supervisor. e) One (1) time and effort report and corresponding payroll register specified salaries chargeable to a different grant but the expense was charged to the Connecting Minority Communities (CMC) grant. Cause – Oversight by responsible employees. Effect – Unallowable cost could have been charged to the grant. 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.

Finding 2024-002 – U.S. Department of Education (USDE), Title IV Student Financial Aid Programs: 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 – Noncompliances 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) The College had a difference in the Federal Work-Study program which was not reconciled to the general ledger. b) One (1) out of sixty (60) students tested for verification was missing their parent’s tax return. The College subsequently submitted the tax return. Total questioned cost was $3,698. 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.

Finding 2023-001 – 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, 2023; Federal Pell Grants Program, FAL No. 84.063, June 30, 2023; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2023; Federal Work-Study Program, FAL 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 – 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. ■ The College had differences in the following programs which were not reconciled to the general ledger: Federal Pell Grant and Federal Direct Student Loans. 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 – The College accepts the auditor’s recommendations and will establish procedures going forth to ensure that Financial Aid and Business Office staff identify and correct any differences between the programs and the general ledger.

Finding 2023-002 – National Park Service (Significant Deficiency): Information on the federal program: Rehabilitation of D.R. Glass Library, FAL No. 15.904, June 30, 2023 Criteria – Federal regulations governing historic preservation. Condition – Non-compliance noted regarding verification of all expenses under the grant and untimely filing of interim report. Questioned Costs – As provided below. Context – We noted the following in connection with our testing of compliance: ■ Concerning the D. R. Glass Library renovation project, the architect certified roughly two-thirds of the $450,000 spent under the grant. The College paid out approximately $131,000 to the construction company without formal certification of incurred expenses. The construction company used AIA Document G702 for payment requests, which includes a certification section. Only three of 11 payment requests had appropriate certifications by the architect or the College before payment was made. ■ The interim report that was due on September 30, 2022 was dated October 31, 2022 and not filed until November 4, 2022 indicating it was filed untimely. Cause – Oversight by responsible employees. Effect – Unallowable costs could have been incurred by the construction company. Reporting deadline was missed. Repeat Finding – No. Auditor’s Recommendation – To ensure compliance and the appropriateness of expenses, all payment requests should be certified either by the architect or the College's designated, qualified person overseeing the project. All performance and financial reports should be filed timely. Views of Responsible Officials – The College accepts the auditors’ recommendations. The College is comfortable that no unallowable cost payments were made in connection with this project; however, it understands that it needs to establish stricter guidelines when it comes to certifications of contractual payments. The College will more closely adhere to program reporting schedules.

Finding 2023-003 – CARES Act Programs (Significant Deficiency): Information on the federal program: Student Aid Portion 18004(a)(1), FAL No. 84.425E, June 30, 2023; Institution Portion 18004(a)(1), FAL No. 84.425F, June 30, 2023; and Historical Black Colleges and Universities 18004(a)(2), FAL No. 84.425J, June 30, 2023 Criteria – Federal regulations governing Higher Education Emergency Relief Fund (HEERF). Condition – Non-compliance noted regarding untimely filing of quarterly and annual report. Questioned Costs – As provided below. Context – We noted the following in connection with our testing of compliance: ■ The quarterly report that was due on April 10, 2023 was not filed until April 21, 2023 indicating it was filed untimely. Cause – Oversight by responsible employees. Effect – Reporting deadlines were missed. Repeat Finding – No. Auditor’s Recommendation – All performance and financial reports should be filed timely. Views of Responsible Officials – The College accepts the auditors’ recommendation. The College will more closely adhere to reporting schedules.

Finding 2022-001 - 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, 2022; Federal Pell Grants Program, CFDA No. 84.063, June 30, 2022; Federal Supplemental Educational Opportunity Grant, CFDA No. 84.007, June 30, 2022; Federal Work-Study Program, CFDA No. 84.033, June 30, 2022; Teacher Education Assistance for College and Higher Education CFDA No. 84.379, June 30, 2022 Criteria - Federal regulations governing the Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs - $0 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) One (1) out of six (6) student files tested did not have their Title IV funds returned within the required 45 days. b) Two (2) out of fifty-four (54) student files tested did not have their refund issued within the required 14 days. 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 impJement corrective actions to ensure that the above findings are resolved and will not recur in future periods.

Finding 2021-002 - U.S. Department of Education (USDE), Title Ill Programs (significant deficiency}: Information on federal program-Federal Title Ill Program, CFDA No. 84.0318, June 30, 2021. Criteria - Regulations require the College to maintain an adequate system of internal controls to protect government funds. Condition - Examination of cash disbursement transactions revealed the College's written cash disbursements check signing policy was not consistently followed by designated check signers. The policy states that there should be two (2) designated authorized check signers on all cash disbursements of $25,000 and greater. The designated authorized signers for the College are the President and Vice President of Finance and Fiscal Affairs. During our examination, we identified several transactions with invoice amount greater than $25,000 that were broken down into check amounts under the $25,000 threshold, which would require dual signatures, so that issued checks needed only a single designated authorized signature. Questioned Costs - None. Context - Simultaneous in person availability of designated authorized check signers. Cause - COVID-19 pandemic interruption of regular business operation. Effect - Condition leads to heightened fraud concerns, and appearance of deliberant non-adherence to established control policy. Repeat Finding - No. Auditor's Recommendation - With the prolonged effect of the COVID-19 pandemic, we recommend the College's governing board and senior management strongly consider a temporary amendment/addendum to the existing written policy to allow for the temporary suspension of the dual check signing policy and adoption of the single check signing policy through the end of the pandemic. This could include a statement that limits the duration of the amended/addended single check signing practice to the duration of the pandemic, and require documented approval by the senior authorized check signer via electronic communication. This will eliminate any appearance of fraud, and willful non-adherence to established policy. Views of Responsible Officials - The College accepts the auditor's recommendation. The College will conduct a review to determine the appropriate posltion(s) for check signer. The College has presented a policy wavier to the Board of Trustees to address Its procedures In this area during the COVID-19 pandemic.

Finding 2021-003 ? 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 Supplemental Educational Opportunity Grant, CFDA No. 84.007, June 30, 2021; Federal Work-Study Program, CFDA No. 84.033, June 30, 2021; Teacher Education Assistance for College and Higher Education CFDA No. 84.379, June 30, 2021. Criteria ? Federal regulations governing Title IV programs. Condition ? Five 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) Nineteen (19) out of 60 student files tested did not have their credits processed within the required 14 days. b) One (1) out of 60 files tested was missing an official transcript and an academic transcript. The College indicated that the student never enrolled for the semester which suggest that routine reconciliations are not being performed between the Financial Aid, Registrar and Business Offices on a timely basis. c) The Institution did not submit verification documentation for two (2) students for testing. Total questioned cost $17,689. d) There were students who received Title IV funding before their accounts were charged. While the charges were eventually posted, this suggests that student accounts are not being reconciled in a timely manner. e) One (1) out of 12 files tested had Federal Work-Study discrepancies as follows: i. Second form of identification such as birth certificate, social security or passport was not in the file. ii. Form I9 was missing the second page. 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 - The College accepts the auditor's recommendation. The College will formulate corrective action measures to address each of these findings.

Finding 2020-001 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs, Excess Student Refunds (significant deficiency): Information on the federal program: Federal Pell Grants Program, CFDA No. 84.063, June 30, 2020; Federal Work-Study Program, CFDA No. 84.033, June 30, 2020; Federal Supplemental Educational Opportunity Grant, CFDA No. 84.007, June 30, 2020; Federal Direct Student Loans, CFDA No. 84.268, June 30, 2020; Teacher Education Assistance for College and Higher Education CFDA No. 84.379, June 30, 2020. Criteria - Federal regulations require the College to have a system of adequate internal control capable of identifying, preventing and correcting errors, material misstatement, and instances of fraud. Condition - Inadequate internal control relative to administration of student refunds and other financial aid. Questioned Costs - $9,047 Direct Loan, but the College later returned to Program. Context - During the fiscal year, the College discovered fraud involving student refunds. The former financial aid director along with several students, including the former director's son, were allegedly involved in the fraud. All students involved (including the son) were eligible Title IV student recipients and they were disbursed various Title IV student aid. The former financial aid director was dismissed by the College during fiscal year 2016 for improprieties but rehired in June 2018. The former financial aid director was dismissed again in February 2020 after an altercation with a student. The fraud was discovered by the new financial aid director while reconciling financial aid disbursements with the Business Office. The College researched it's records to determine the extent of the fraudulent refunds and concluded that nine (9) students received ineligible refunds totaling $118,824. It appears that the excessive refunds were due to bogus financial aid awards posted to students' accounts, such as scholarships, alternative loans and other types of financial aid awarded by the former financial aid director. This generated erroneous credit balances on student accounts. Each of the nine (9) students received as many as 11 refund checks. While researching its records, the College was able to correct Title IV or state aid incorrectly awarded and returned such funds to the appropriate federal or state program. Consequently, the excess student refunds essentially involved institutional funds. The College has reported this matter to the U.S. Department of Education. The scope of the Auditor's examination of student refunds corroborated the College's findings. Cause - Insufficient management oversight of administration of financial aid, untimely reconciliations and inadequate validation and approval process for student refunds. Effect- The College could incur losses without properly functioning internal controls. Repeat Finding - No. Auditor's Recommendation - We strongly recommend the College correct the apparent deficiencies in its internal control relative to the administration of financial aid by establishing procedures to eliminate the apparent autonomy of the Financial Aid Director in administering aid to students. At a minimum this should include periodic reconciliation between financial aid and business office, and the Business Office more closely scrutinizing the request for student refunds prepared by the Financial Aid Office. Implementing this will allow for greater accountability and remove the element of autonomy from the Financial Aid Director. Strengthen controls by: a) When processing refunds, include student account transcript, evidence that charges and credits have been validated, enrollment status support, etc.; b) An assigned SFA employee should validate student refunds with another employee reviewing and approving the work before submission to the Business Office; c) Student aid transactions should never be processed by a relative of a student; d) Never rehire a former employee who was previously dismissed for improprieties; e) Improve training of non-SFA employees involved with student fiscal activities (e.g. Student Accounts Clerk, Controller, Vice President of Finance, Vice President of Student Affairs) for a better working knowledge of federal and state student aid; f) Re-work cost of attendance budgets as they are too high and produce larger than necessary student refunds; and g) Vigorously conduct monthly reconciliations of student aid and student accounts on a timely basis. Views of Responsible Officials -The College moving forward will ensure that duties within the Office of Student Financial Aid are segregated in such a manner that no one position is in a position to negate the checks and balances that are in place to ensure that no one person has the power to totally influence all aspects of the student financial aid process (i.e. awarding, packaging, submitting information to third parties, and initiating student disbursements). In addition, the College will ensure that Department of Education training is made available to Business Office personnel on a more regular basis.

Finding 2020-002 - U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (significant deficiency): Information on the federal program - Federal Pell Grants Program, CFDA No. 84. 063, June 30, 2020; Federal Work-Study Program, CFDA No. 84. 033, June 30, 2020; Federal Supplemental Educational Opportunity Grant, CFDA No. 84. 007, June 30, 2020; Federal Direct Student Loans, CFDA No. 84.268, June 30, 2020; Teacher Education Assistance for College and Higher Education CFDA No. 84.379, June 30, 2020. Criteria - Federal regulations governing the Title IV programs. Condition - Several instances of 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 60 files tested had Federal Work-Study discrepancies as follows: i. W - 4 missing; ii. No FERPA signature, no signature on job description and no signature on FWS agreement. (b) Three (3) out of 60 files tested were missing official high school and/or college transcripts. The total Title IV financial aid awarded was $20,208. The College subsequently received two (2) of the missing transcripts. (c) Four (4) out of 60 students tested were not properly verified. The total questioned cost was $57,017. Subsequently, all have been resolved with no remaining questioned cost. 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 instances of noncompliance are resolved and do not recur in future periods. Views of Responsible Officials - Federal Work-Study - Going forth we will ensure that all required federal college workstudy program documents will be housed in both the Office of Student Financial Aid and the Business Office. Students wlll not be eligible to start work-study assignments until both offices agree that each has all required documents. Transcripts - The College has engaged in a retraining of Office of Financial Aid personnel to emphasize that students are not to be disbursed any aid if all required official transcripts have not been received. The Registrar's Office will update its "Missing Transcript List" throughout the academic semester to ensure that the Office of Financial Aid is aware of students without required transcripts. Verifications - The College has contracted with a third-party entity to provide student verifications to ensure proper and timelier student verifications.

Finding 2020-003 - Deficiency Noted Regarding Internal Control Over Time and Effort Reporting Affecting Federal Funds: Information on the Federal Program - U.S. Department of Education, Title Ill Programs, CFDA No. 84.0318, June 30, 2020 Criteria - Federal regulations require the College to have in place a structure of internal controls to ensure adequate monitoring of employee effort charged to Federal programs. Condition - Overcharge of expense to Federal program. Questioned Costs - $1,083 for the tested transactions. Context - During our review of the Title 111p rogram payroll disbursements, one (1) of eight (8) transactions tested reflected an employee's time and effort at 25% of effort for the month of September 2019. However, the College allocated 50% of the employee's salary/wages to the Title Ill program. Cause - Management oversight. Effect - Overstatement of eligible program expense for the period. Repeat Finding- No. Auditor's Recommendation - We recommend the Business Office review time and effort reports prior to the payroll runs to ensure allocation of an employee's compensation is consistent with the time and effort report. This will eliminate expense over or under charges to Federal. Views of Responsible Officials - The College will provide closer coordination between the Office of Human Resources and the Office of Sponsored Programs on a monthly basis to ensure that a review of Time & Effort reports is performed.

Finding 2020-004 - Deficiency Noted Regarding Internal Control Over Cash Management Monitoring of Federal Funds: Information on the Federal Program - U.S. Department of Education, Title Ill Programs, CFDA No. 84.0318, 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 Educational Opportunity Grant, CFDA No. 84. 007, June 30, 2020; Federal Direct Student Loans, CFDA No. 84.268, June 30, 2020; Teacher Education Assistance for College and Higher Education CFDA No. 84.379, June 30, 2020. Criteria - Federal regulations requires the College to have Federal funds on hand no more three (3) business days after receipt of funds. Condition - An instance of excess Federal cash on hand. Questioned Costs - Context- Review of drawdowns by the College for October 2019 and March 2020 revealed there was excess cash on hand for the Pell program in the amount of $49,442 based upon the October 1, 2019 drawdown. Cause - Management oversight. Effect - The College's access to Federal cash management system could be suspended and sanctions applied. Repeat Finding - No. Auditor's Recommendation - We recommend the Business and Financial Aid Offices work more closely together at reconciling drawdowns with incurred program expenses. The College should ensure that no drawdowns are in excess of three (3) days of need. Closer monitoring of expenses incurred and drawdowns made will eliminate the risk of non-compliance with the cash management 3-day rule. Views of Responsible Officials - The College will more carefully review its drawdown calculations. In addition, the College has instructed Business Office personnel when using the Jenzabar "Create Reversing Transactions" option to use the current calendar date rather than the initial transactional date to prevent accounting adjustments from resulting in excess cash situations.

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