Warner Pacific UniveristyHigher Education

Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.033 – Federal Work Study Program Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: June 1, 2024 to May 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 675.18(g) require institutions to use at least seven percent of the sum of its initial and supplemental Federal Work Study allocation for an award year to compensate students employed in community service activities unless a waiver is obtained from the Department of Education. Condition: It was noted during audit testing that the University did not meet the community service requirement for its Federal Work Study allocation and was unable to obtain a waiver from the Department of Education releasing it from the requirement. Prior to the 2024-2025 award year, the University had received a waiver for this requirement. Questioned Costs: N/A Context: Prior to the 2024-2025 award year, the University had received a waiver for this requirement. Cause: Management did not receive a waiver from the Department of Education to waive this requirement. Effect: The Department of Education could reduce or eliminate the University’s Work Study award. Repeat Finding: No Auditor’s Recommendation: We recommend that the University establish procedures to ensure that at least 7% of Federal Work Study allocation is used for community service jobs, or successfully receive a waiver as had happened in previous years. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007 – Federal Supplemental Education Opportunity Grants 84.033 – Federal Work Study Program 84.038 – Federal Perkins Loans 84.063 – Federal Pell Grant Program 84.268 – Federal Direct Student Loans 84.379 – Teacher Education Assistance for College and Higher Education Grants Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: June 1, 2024 to May 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 685.309(b), states schools must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 day. There are two categories of enrollment information; "Campus Level" and "Program Level," both of which need to be reported accurately and have separate record types. Condition: During our testing, it was noted 1 of 22 students enrollment information on NSLDS did not match their institutional information. The institution also must update all records every 60 days, and we noted 1 out of 22 students had instances greater than 60 days where their records were not updated. Questioned Costs: N/A Context: The enrollment roster file contained dates that were incorrect for the Enrollment and Program Level effective dates. In the cases of this error the enrollment information should have been the date per institution's records for the Campus and Program Level. There were also instances where the information on the Enrollment and Program level were inconsistent with the University's records. Finally, Updates to NSLDS were not completed in a timely manner and some were not updated at all. Cause: The University has had turnover and updates were missed. Effect: The NSLDS system is not updated with the student information which can cause a student to not properly enter the repayment period. Repeat Finding: No Auditor’s Recommendation: We recommend the University review its reporting procedures to ensure the students’ statuses are accurately and timely reported to NSLDS as required by regulations. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007 – Federal Supplemental Education Opportunity Grants 84.033 – Federal Work Study Program 84.038 – Federal Perkins Loans 84.063 – Federal Pell Grant Program 84.268 – Federal Direct Student Loans 84.379 – Teacher Education Assistance for College and Higher Education Grants Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: June 1, 2024 to May 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 668.164(h) states a Title IV, HEA credit balance occurs whenever the amount of Title IV, HEA program funds credited to a student's ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. A Title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but, (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition: During our testing of credit balances resulting from federal funds, we noted 1 credit balance out of 40 tested where the credit balance was not refunded within the 14 day period. Questioned Costs: N/A Context: During our testing of credit balances resulting from federal funds, we noted 1 credit balance out of 40 tested where the credit balance was not refunded within the 14 day period. Cause: The University did not have proper procedures in place to ensure all credit balances are refunded within the 14 day period. Effect: The University did not refund students within 14 days for credit balances that arose from federal funds as required by ED regulations. Repeat Finding: No Auditor’s Recommendation: We recommend the University review their current policies and procedures around credit balances and ensure the processes in place are sufficient to ensure student credit balances due to federal funds are refunded within 14 days. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007 – Federal Supplemental Education Opportunity Grants 84.033 – Federal Work Study Program 84.038 – Federal Perkins Loans 84.063 – Federal Pell Grant Program 84.268 – Federal Direct Student Loans 84.379 – Teacher Education Assistance for College and Higher Education Grants Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: June 1, 2023 to May 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data (16 CFR 314). Institutions are required to develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts. The regulations require the written information security program (WISP) to include nine elements for institutions with 5,000 or more customers (16 CFR 314.3(a)). The WISP for institutions with fewer than 5,000 customers must address seven elements (16 CFR 314.3(a) and 16 CFR 314.6). The elements that an institution must address in its WISP are outlined in 16 CFR 314.4. At a minimum, the institution’s WISP must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8), including assessing apps developed by the institution. Additionally, the written security program must provide for the institution to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented (16 CFR 314.4(d)). Condition: There is one item missing entirely from the WISP: CLA was not able to verify that the WISP provides for the information security program to be based on a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information (as the term customer information applies to the institution). These risks could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information. Additionally, the WISP should assess the sufficiency of any safeguards in place to control these risks. There are five items included in draft policies; however, they are not implemented as of the end of the fiscal year: The following minimum safeguards identified in 16 CFR 314.4(c)(1) through (8) were in draft form in the WISP: • Implement and periodically review access controls. • Assess apps developed by the institution • Implement multi-factor authentication for anyone accessing customer information on the institution’s system • Maintain a log of authorized users’ activity and keep an eye out for unauthorized access. In addition, the draft policy relating to how the institution will oversee its information system service providers (16 CFR 314.4(f)) was not formally implemented. Questioned Costs: N/A Context: These new GLBA requirements became applicable on June 9, 2023. However, there are a few elements missing from their WISP. Cause: There was not a formal process in place to review against all the new GLBA requirements to ensure compliance as well as there was a general lack of capacity in IT staffing to formally implement the WISP during the year. Effect: The student personal information could be vulnerable. Repeat Finding: Yes – 2023-003 Auditor’s Recommendation: We recommend that the University review the updated GLBA requirements and ensure their WISP includes all required elements and is formally implemented. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

2023 – 002 Internal Controls Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: Various Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per federal regulations 200.303, a non-Federal entity must 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. In addition, per the student financial aid handbook, a school must ensure that its administrative procedures for the FSA programs include an adequate system of internal controls or checks and balances. Condition: During our compliance testing for eligibility, we noted there is not an individual review of students' award packages; however, we noted there were some mitigating controls within the student information system as well as monthly reconciliations that may catch various issues. In addition, we noted there is no review for return of title IV calculations. There is one individual performing these calculations. Lastly, we noted there is only one individual who is processing and reviewing professional judgment cases. Questioned costs: None Context: During our audit procedures, it was noted there are not sufficient checks and balances in place over a few compliance requirements. Cause: The University has not historically had review procedures in place. Effect: While we found no compliance errors in our samples, there is a risk of human error causing future compliance errors. Repeat finding: No Recommendation: We recommend the University review their internal control procedures over awarding, return of title IV calculations, and professional judgment and implement a formally documented review process. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 003 Gramm-Leach-Bliley Act Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: Various Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. (16 CFR 314) The Federal Trade Commission considers Title IV-eligible institutions that participate in Title IV Educational Assistance Programs as “financial institutions” and subject to the Gramm-Leach-Bliley Act (16 CFR 313.3(k)(2)(vi). Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned costs: None Context: During our audit procedures, it was noted the University did not properly document safeguards for the identified risks in their risk assessment over the following areas in 16 CFR 314.4 (b) which are (1) Employee training and management; (2) Information systems, including network and software design, as well as information processing, storage, transmission and disposal; and (3) Detecting, preventing and responding to attacks, intrusions, or other systems failures. Cause: The University was not aware of the Gramm-Leach-Bliley Act requirements to document safeguards. Effect: The student personal information could be vulnerable. Repeat finding: No Recommendation: We recommend the University review their documentation and ensure that there are documented safeguards for identified risks. We also recommend reviewing the changes in the Gramm-Leach-Bliley Act regulations that were required to be implemented as of June 9, 2023. Views of responsible officials: There is no disagreement with the audit finding.

FINDING 2022-002 ? Special Tests and Provisions ? Return of Title IV: Significant Deficiency in Internal Control over Compliance CFDA Number(s) Name of Federal Program or Cluster Federal Award Number Award Year Questioned Costs Various Student Financial Assistance Cluster N/A Year ended May 31, 2022 Known and likely questioned costs were below $25,000, therefore, there are no questioned costs reported. Criteria ? 34 CFR Section 668.22(e)(2): Percentage earned. The percentage of Title IV grant or loan assistance that has been earned by the student is? i. Equal to the percentage of the payment period or period of enrollment that the student completed (as determined in accordance with paragraph (f) of this section) as of the student?s withdrawal date, if this date occurs on or before? (A) Completion of 60 percent of the payment period or period of enrollment for a program that is measured in credit hours; or (B) 60 percent of the clock hours scheduled to be completed or the payment period or period of enrollment for a program that is measured in clock hours; or ii. 100 percent, if the student?s withdrawal date occurs after? (A) Completion of 60 percent of the payment period or period of enrollment for a program that is measured in credit hours; or (B) 60 percent of the clock hours scheduled to be completed or the payment period or period of enrollment for a program that is measured in clock hours; or 34 CFR Section 668.22(f)(2): The total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. Condition/Context ? A sample of 15 out of a population of approximately 72 federal aid recipient students whom withdrew, dropped out, or enrolled but never attended during the 2021-2022 academic year were selected. Student records were compared to the calculation of the return of Title IV funds, if any, and the federal government?s Common Origin and Disbursement system. For 2 of the selected students, the amount to be returned was calculated incorrectly. This resulted in an understatement of student financial assistance earned by the students. Questioned Costs ? Known and likely questioned costs were below $25,000, therefore, there are no questioned costs reported. Effect ? When the return of Title IV funds is not correctly calculated, the student ultimately receives the incorrect amount of funding. Cause ? The University incorrectly based calculations on the default status of full-time rather than adjusting the calculation for part-time students. Recommendation ? We recommend the University implement a process to review student enrollment status to ensure funds returned to students appropriately reflect whether they have full-time or part-time status. Views of Responsible Officials and Planned Corrective Actions ? When performing Return of Title 4 (RT24) calculations for PGS students who withdrew early in the term and were receiving Federal Pell Grant, the University reduced the Pell grant to the new enrollment level, but did not code the Colleague system with the revised enrollment level. Also, the University did not update the enrollment level code to match only the number of courses that the student started. The University has corrected all the past R2T4 calculations that were done in error. The University has revised its procedures to prevent this error from reoccurring.

FINDING 2022-003 ? Reporting ?Significant Deficiency in Internal Control over Compliance CFDA Number(s) Name of Federal Program or Cluster Federal Award Number Award Year Questioned Costs 84.425 E 84.425 F 84.425 L COVID-19 ? Education Stabilization Fund ? Higher Education Emergency Relief Fund N/A Year ended May 31, 2022 $0 Criteria ? 86 FR 26213 requires Education Stabilization Fund (?ESF?) recipients to post the Student Quarterly Report to their website within 10 days of the end of the quarter in which the funds were spent. Condition/Context ? Grant amounts and expenditures of student funds reported on the University?s website were not reported timely for the quarter ending December 31, 2021. Additionally, during our initial walkthrough of the control processes with University personnel, we were unable to identify a control related to the review and approval of the required quarterly reports. Questioned Costs ? No questioned costs were identified as part of this finding. Effect or Potential Effect ? The required quarterly student reporting posted to the University?s website was not reported timely as required by the conditions of the grant. Cause ? The exceptions occurred as a result of the lack of internal controls in place to effectively review and approve published data in accordance with underlying Federal regulations. Recommendation ? We recommend that the University implement a process by which reported ESF expenditures are compared against applicable grant award notifications to ensure complete and accurate information is contained in the required quarterly reporting posted to the University?s website. Views of Responsible Officials and Planned Corrective Actions ? As indicated, the University did not post the student required HEERF until January 19, 2022; 9 days after the deadline due to oversight. This was the final report. The Department has since consolidated the reporting for student and institutional HEERF reporting. The University controller is now responsible for all student and institutional reporting.

FINDING 2019-001 ? Special Tests and Provisions: Student Status Changes ? (Repeat Finding) ? Significant Deficiency in Internal Control and Instances of Noncompliance Federal Program: Federal Direct Student Loans (CFDA #84.268), Federal Pell Grant Program (CFDA #84.063), Federal Perkins Loan (CFDA #84.038) Federal Agency: U.S. Department of Education Award Year: 2018-19 Criteria: Under the Direct Loan program, institutions must complete and return within 30 days of receipt the Roster File sent by the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). The Roster File is transmitted electronically. The institution determines how often it receives the Roster File, but the minimum is every two months. Once received, the institution must update the information for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS web site. Unless the institution expects to complete its next Roster File within 60 days, the institution must notify NSLDS within 30 days if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis (Direct Loan, 34 CFR section 685.309). Although many institutions use a third-party service organization to perform this function, the responsibility for submission to NSLDS remains with the institution. Condition: During our testing of student status change reporting, we identified in 1 of the 25 students tested, a status change was not reported to the NSLDS within the required timeframe. Questioned costs: None to be reported.Context: As a result of our audit procedures, we noted 1 student who had withdrawn from Warner Pacific University in May 2013 and had not been enrolled since. In August 2018, the student submitted a petition to graduate that was reviewed and approved by the University, resulting in the completion of the degree. In December 2018, the University determined they needed to individually report the graduation, which was not in accordance with required reporting timelines. Cause/ Effect: The University indicated that this was an isolated incident that was caused by a personnel error and unique circumstance. The University has since implemented controls when unique situations occur to ensure changes are reported timely. These include a monthly degree verification report, which includes all degrees posted within the past month, to ensure all individual degrees have been reported to NSLDS. Additionally, the Registrar has been added to the Academics Policies Committee, which is charged with approving any petitions and discussion of other unique circumstances, so the Registrar can report all individual circumstances directly. Moss Adams did not note any other individuals that were not reported or reported outside of the required timeframe during our testing. Recommendation: We recommend the University consistently adhere to their procedures in order to ensure that all student status changes are reported to the NSLDS in a complete, accurate, and timely manner. Views of responsible officials and planned corrective actions: The University is taking steps to improve its focus on reporting, including revision of policies and procedures to decrease the number and instances of late reporting of student status changes. They have hired a new Registrar, will be reviewing their policies and procedures, and will hold a monthly meeting between the Executive Director of Student Financial Services & Financial Aid to review complex student cases.

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