Lamar Institute of Technology

Criteria: As outlined in the Code of Federal Regulations, Title 34, §690.83(b) and §668.32(f), a student is eligible to receive Title IV funds if the student maintains satisfactory academic progress (SAP) in their course of study according to the Institution’s published SAP standards. Among other requirements, a school’s published SAP standards should include a qualitative component, such as grade point average (GPA) as well as a quantitative component, such as pace of progression (pace) toward the student’s degree. Condition/Context: The Institution’s published SAP standards require students to maintain a GPA of at least 2.0 and pace of at least 67%. We selected a statistically valid sample of 40 disbursements from a population meeting the criteria of over 250 disbursements, with a total population 2,640 and 3,838 actual number of disbursements for Direct Loan and Pell Grant, respectively. Out of the 40 disbursements selected for eligibility testing, four disbursements were made to students who were not maintaining SAP in accordance with the Institution’s published GPA and pace requirements. In total, we detected $14,755 in ineligible disbursements, which is the known questioned cost. The known questioned costs equated to 13.77% and 11.79% of the dollar amount of the sample of disbursements tested, for Direct Loan and Pell Grant, respectively. Although the matter above was independently noted during our normal testing procedures, management had advised us during the planning stage of the audit that the issue had been self-detected as part of the Institution’s internal audit process performed by Texas State University System (TSUS) Office of Internal Audit, which is independent of the Institution. As a result of TSUS Office of Internal Audit’s discovery, they expanded the scope of their examination pulling a script of all disbursements meeting the criteria in question to determine if ineligible disbursements were made. TSUS Office of Internal Audit concluded, and management subsequently agreed, that for the fiscal year under our audit the total amount of ineligible disbursements per TSUS Office of Internal Audit examination was $673,780. While our finding is related to the fiscal year ended August 31, 2023, it should be noted that TSUS Office of Internal Audit and management stated they had found instances of noncompliance with eligibility requirements in prior periods, and they are jointly in the process of testing of eligibility of disbursements from prior periods. Cause: It appears the Institution’s student financial aid processing system, Banner, was not properly configured to prevent disbursements to students who were not maintaining SAP. Effect: The population data provided to us during the audit showed cash basis totals, which differs from accrual basis data presented on the SEFA, for Direct Loan disbursements of $5,098,601 and total Pell Grant disbursements of $6,532,682. Extrapolating the percentages noted above across the entire populations, we estimate possible ineligible Direct Loan disbursements to be $701,860 and Pell Grant disbursements to be $770,484. While this was our estimate, we reviewed TSUS Office of Internal Audit’s targeted scope of work and concluded it results in a significantly greater confidence level. Accordingly, while we have extrapolated the results of our testing, we consider the Office of Internal Audit’s results to better reflect the actual amount of ineligible disbursements and is the amount we are reporting for questioned costs. Questioned Costs: The questioned costs for ineligible disbursements are $673,780. Repeat Finding from Prior Year: No. Recommendation: The Institution should correct the configuration of the student financial aid processing software, Banner, to prevent ineligible disbursements to students who are not maintaining SAP. The Institution should review its published SAP standards annually and review Banner reports to ensure the report is prepared in accordance with the standards. Additionally, the Institution should implement procedures that include a secondary manual review of disbursements for eligibility. Management's Response: Management concurs with the finding and has been working with the TSUS Office of Internal Audit to ensure that all ineligible disbursements have been identified. The Institution is preparing a submission through the Department of Education’s reporting system to reduce future requests by the ineligible disbursements identified as questioned costs for the period covered by this audit, as well as prior years impacted. As a follow up to this matter, management will be requesting TSUS’s Office of Internal Audit to seek an audit delegation authorization from the State Auditor’s Office to have an independent auditor test compliance with the Institution’s revised procedures.

View of Responsible Officials: The Texas State University System's Office of Internal Audit {internal audit function for Lamar Institute of Technology) identified errors with the awarding of Title IV funds to students who were not maintaining satisfactory academic progress {SAP) in their course of study according to the Institution's published SAP standards. Lamar Institute of Technology {LIT) agrees with the external auditor's finding and recommendations. Corrective Action Plan In response to the external audit finding, LIT will implement the following corrective action plan. 1. Electronic processes for determining if a student is maintaining SAP was run in Banner for Fall 2023, and going forward, using guidance from the Ellucian Action Line, our Banner support group. Anticipated Completion Date: Corrective measures began on 8/11/2023 and anticipated completion is 90 days from the auditor's report {1/31/2024), which would be on or before April 30, 2024. 2. As an additional internal control procedure to test the Banner system, the Financial Aid Department reviewed SAP manually on all students enrolled in Fall 2023 and Spring 2024 with a FAFSA application to ensure their eligibility had been set correctly. Action plan will be extended to future semesters as needed. Anticipated Completion Date: Corrective measures began on 8/11/2023 and anticipated completion is 90 days from the auditor's report {1/31/2024), which would be on or before April 30, 2024, fo(Fall 202-3-and Spring 2024. - - 3. In addition to settingSAP prior to the semester and performing verification checks, LIT requested an additional mtemal con-trol proces-sin Banner- an automatic process to run nightly after the initial SAP is set to make sure each student's eligibility is set correctly before awarding aid. This process was devel-epe.a__and tested _b_y _the Information Technology Department before implementation under the direction and-in collaboration with the Financial Aid Department. Anticipated Completion Date: 1/29/2024. 4. A return of funds will be done for students that received Title IV funds for FY 2023 in error. In total, $673,780 will be returned via the Common Origination and Disbursement Web Site of the Department of Education. Anticipated Completion Date: 90 days from the auditor's report (1/31/2024), which would be on or before April 30, 2024. Individual Responsible Linda Korns, Director of Financial Aid