UNIVERSITY OF NEW MEXICO

Section III – Federal Award Findings and Questioned Costs Finding Reference Number: 2025-006 Federal Agency: Department of Health and Human Services (DHHS) Program Name: Research and Development Cluster ALN: 93.778 Award Number: GSA 22-630-8000-0015 Federal Award Year: 2024-2025 Compliance Requirement: Allowable Costs Condition: During our testing over allowable fringe expenditures, we identified a transaction in which the fringe expenditure charged to the grant was incorrectly calculated resulting in the overstatement of fringe expenditures. Specifically, we tested 40 fringe samples and noted 1 sample in which the FICA expense was incorrectly calculated resulting in an overstatement of FICA expenditures charged to the grant of $1,245.93. Criteria: Per 2 CFR section 200.430(a), costs of compensation for personal services are allowable to the extent the total compensation for individual employee is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both federal and nonfederal activities. Per 2 CFR § 200.303 requires the recipient of federal funds to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: UNM claimed and received payment on an unallowable expenditure under the grant agreement of $1,245.93. Cause: While management’s review over payroll adjustments ensures reversals were fully offsetting against the original payroll entry in total, the review did not properly ensure that reversals were fully offsetting against the original payroll entry at the index-account level (individual grants are tracked via index accounts). Questioned Costs: $1,245.93. Represents the difference between the actual FICA expenditure charged to the grant and that calculated using the gross pay allocated to the grant and the applicable FICA rate. Repeat Finding: No Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Auditor’s Recommendation: We recommend that UNM revise its’ procedures related to the review of payroll and fringe adjustments to ensure that reversing entries are completely and accurately reversed at the index-account level as opposed to performing the review in aggregate.

Finding Reference Number: 2023-001 Federal Agency: U.S. Department of Education (USDE) Program Name: Student Financial Assistance Cluster ALN: 84.268 Award Numbers: NA Federal Award Year: 2022-23 Questioned Costs: None Compliance Requirement: Special Tests and Provisions – Disbursements to or on Behalf of Students Type of Finding: Significant Deficiency and Material Non-Compliance Condition: The University of New Mexico (UNM) has opted-in to the federal direct loan (FDL) disbursement notifications Common Originations and Disbursement online (COD) service and the majority of the spring notifications were not sent within the required timeframe. UNM was unaware the spring notifications were not sent timely. For 40 FDL disbursements during the 2022-23 federal award year, 12 spring disbursements included in our sample were sent outside the 30-day required timeframe. All 12 of these spring notifications were sent with the correct content. Criteria: Per 34 CFR 668.165, when FDL are being credited to a student’s account, 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; 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. 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 FDL. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that FDL notification are sent timely. Effect: UNM is not complying with the 30 day before/after the actual disbursement requirement for the FDL notification. Cause: UNM did not monitor the FDL notifications at a sufficient level to determine the spring notifications were not sent timely. During the audit, UNM noted that when the university sends a COD record for one student with both fall and spring FDL amounts and fall and spring dates of disbursement, COD sends the letter within 30 days of the fall disbursement date. The notification letter includes the required content including the date and amount for both the fall and spring disbursement. The notification is not resent within 30 days of the spring disbursement date. Spring disbursements notification that are updated or are singular (there is no associated fall award) are being sent within the 30 days of the spring disbursement date. Questioned Costs: None Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Auditors’ Recommendation: UNM should continue discussions with COD on how to correct or implement an internal solution. Management Response: UNM agrees with this recommendation. UNM will implement an internal loan disbursement notification process. UNM’s Financial Aid Director, is responsible for the corrective action plan, with an anticipated completion date of January 15, 2024.

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