St. John's CollegeHigher Education

Finding No. 2023-002: Improper Preparation of the Schedule of Expenditures of Federal Awards – Material Weakness in Internal Control over Compliance Criteria Nonfederal entities must record expenditures related to ALN 97.036 on the Schedule of Expenditures of Federal Awards (SEFA) when (1) FEMA has approved the nonfederal entity’s Project, and (2) the nonfederal entity has incurred the eligible expenditures. Federal awards expended in years subsequent to the fiscal year in which the Project is approved are to be recorded on the nonfederal entity’s SEFA in those subsequent years. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Finding No. 2023-002: Improper Preparation of the Schedule of Expenditures of Federal Awards – Material Weakness in Internal Control over Compliance (continued) Condition and Context Expenditures related to ALN 97-036 which met both requirements listed above during the year ended June 30, 2023, were not included on the SEFA. Cause Internal controls were not designed effectively to ensure that the SEFA was complete. Effect The SEFA was understated by $196,367 which could impact major program determinations and required coverage to be tested. Questioned Cost None. Repeat Finding No. Recommendation We recommend that the College enhance its completeness review process of internal control to ensure that the SEFA is complete. Views of Responsible Officials See corrective action plan.

Criteria Institutions are required to retain the required documentation for each student that has been flagged by the Department of Education to be verified. Condition and Context The Annapolis campus was unable to locate the supporting verification documents for one student out of 25 tested that was selected by the Department of Education to be verified. Cause Internal controls were not designed effectively to ensure that documents were filed appropriately during an office move made by the Annapolis Financial Aid Department. Effect The College is unable to demonstrate that they are in compliance with the federal requirement to verify the applicant?s information. Questioned Cost None. Repeat Finding No. Recommendation An important part of a system of internal control is to ensure supporting verification documents for students are kept in a secure location that can later be found in an efficient and timely manner. Views of Responsible Officials and Planned Corrective Action The College was in a state of transition in response to COVID-19. Several offices were transitioned back to dormitory space. The files have since been secured.

Criteria Institutions are required to keep original paper promissory notes in a locked, fireproof safe. Condition and Context The Annapolis campus did not have the original Perkins loans promissory notes in a locked, fireproof safe. During fiscal year 2021, the Annapolis financial aid department moved to a temporary location due to shifting of the use of space at the campus. The temporary location was within a historic building built in 1722. The flooring of that building cannot take the weight of the fireproof cabinets. Cause Internal controls were not designed effectively to ensure that the original Perkins loans promissory notes were filed appropriately after the office move. Effect The College is not in compliance with the federal requirement to keep Perkins loan promissory notes in a locked, fireproof safe. Questioned Cost None. Repeat Finding No. Recommendation Management should enhance its internal control to ensure that the College is in compliance with all requirements of the program including that the original Perkins loans promissory notes are kept in a locked, fireproof safe. Views of Responsible Officials and Planned Corrective Action The loan documents have been in fireproof cabinets for years. The College was in a state of transition in response to COVID-19. Several offices were transitioned back to dormitory space. The files have been secured and will be placed back in the appropriate cabinets.

Criteria In accordance with ?200.510, the College is required to prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee?s financial statements which must include total federal awards expended based on when the activity related to the federal award occurs. Condition and Context All expenditures related to a federal award should be included on the Schedule of Expenditures of Federal Awards. Cause Internal controls were not designed effectively to ensure that the Schedule of Expenditures of Federal Awards was complete. Federal funding passed through from the state of Maryland was not included. Effect The Schedule of Expenditures of Federal Awards was understated by $200,000. Questioned Cost None. Repeat Finding No. Recommendation We recommend that the College enhance its internal control to ensure that pass-through grant funding is reviewed to determine if the original funder is a federal agency. These awards should be reviewed for a CFDA number, which is now known as a federal assistance listing number (FALN). Views of Responsible Officials and Planned Corrective Action This was an unusual one-time grant from the state of Maryland in response to COVID-19 relief. New awards will be reviewed for the CFDA Number.