PACIFIC NORTHWEST COLLEGE OF ARTNon-Profit

Criteria: 34 CFR 685.300(b)(5) [The school must] on a monthly basis, reconcile institutional records with Direct Loan funds received from the Secretary and Direct Loan disbursement records submitted to and accepted by the Secretary. Condition: Four of the monthly direct loan reconciliations were selected for testing initially. When insufficient documentation was provided, the other eight months were examined as well. From what information was provided, it appeared that the College was tracking its draws and returns of direct loans. However, there were no reconciliations to the direct loan amounts recorded at the Department of Education for the months of November through June. Context: The deficiency was discovered during the audit testing of direct loan reconciliations. Cause: Changes in staffing led to some lapses in controls and processes. Those who were tracking the draws and returns made by the College may not have been aware reconciliations were required. Effect: The College did not reconcile their internal records to those maintained by the Department of Education on a monthly basis. Recommendation: We recommend that the College institute a month-end checklist which includes the individual who performed the monthly direct loan reconciliation, the individual who reviewed it, and the date the reconciliation was performed. Views of Responsible Officials: The College concurs with the audit finding and has implemented a monthly reconciliation process.

Criteria: 34 CFR 668.22(f)(2)(i) 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. Student Financial Aid Handbook 2019-2020 (page 5-80) Where classes end on a Friday and do not resume until Monday following a one-week break, both weekends (four days) and the five weekdays would be excluded from the R2T4 calculations. Condition: All Return of Title IV calculations for the year were selected for testing (15 total returns). All of the spring semester returns (eight) were calculated to remove a break of five days for spring break. However, the weekend before and after the break were not considered in the calculation. This error resulted in the college returning an excess $1,002 in R2T4 returns. Context: The deficiency was discovered during the audit testing of Return of Title IV. Cause: Due to staffing changes, the setting in the college?s software for the break was not updated to include the weekend before and after the break. This appears to be the result of turnover in the financial aid department and no process of review for the calculations. Effect: The College returned $108 more in Pell Grant funds and $894 more in direct loan funds than they should have. Recommendation: We recommend the financial aid department install a process where R2T4 calculations are reviewed by a second staff member for accuracy of information. Views of Responsible Officials: The College concurs with the audit finding and will implement a process for review of R2T4 calculations.

Criteria: 34 CFR 668.22(j)(1) An institution 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 institution's determination that the student withdrew. Condition: All Return of Title IV calculations for the year were selected for testing (15 total returns). The College was unable to provide documentation of the dates the returns were made through G5 for the students. A reconciliation of the College?s records to G5 was performed at the end of the fiscal year, so it appears the funds were returned, but no record could be located noting if the return was within the required period. Context: The deficiency was discovered during the audit testing of Return of Title IV.Cause: Prior management in the business office had adopted a policy whereby the drawdowns of funds from G5 did not directly correspond with the disbursement rosters from the financial aid department. The result of this policy was that additional records had to be maintained to determine which student?s funds are included in the draws and returns from G5. There was also significant turnover in the business office during the year. If adequate records were maintained, the new personnel were unable to locate them. Effect: While the returns were made, we are unable to determine if they were made within the required timeframe. Recommendation: We recommend the business office reevaluate their policy of not matching draws and returns in G5 with the disbursement rosters from the financial aid department for better ease of tracking. Failing that, we recommend the business office improve its documentation of which student draws and returns are being performed with each transaction in G5. Views of Responsible Officials: The College?s process of drawing and returning G5 funds is consistent with what it has done in past years; G5 funds are disbursed to students and later drawn based on the College?s cash needs. While we understand that this process makes it difficult for the auditors to trace specific R2T4 transactions, the process is conservative as funds needing to be returned had not yet been drawn. The College will implement a procedure for documentation of specific student draws and returns.

Criteria: 34 CFR 668.22(c)(1)(ii) For a student who ceases attendance at an institution that is not required to take attendance, the student?s withdrawal date is the date, as determined by the institution, that the student otherwise provided official notification to the institution of the student?s intent to withdraw. Condition: All Return of Title IV calculations for the year were selected for testing (15 total returns). Two of the return calculations had withdrawal dates that were later than those indicated on the students? official withdrawal forms provided by the Registrar. The error resulted in the College returning $547 less than it should have. Context: The deficiency was discovered during the audit testing of Return of Title IV. Cause: With the turnover in the financial aid and business offices, there were breakdowns in communications between departments. As such, the financial aid department was not provided copies of the withdrawal forms when preparing the R2T4 calculations and, instead, used the date they were notified as the withdrawal date. Effect: The College returned $547 less in direct loans than it should have. Recommendation: We recommend regular meetings between the financial aid, business, and registration departments to ensure proper communication of information for withdrawing students. We recommend the meetings occur no less than monthly. Views of Responsible Officials: Management concurs with the auditor?s recommendation to improve communications between the Registrar?s office and Financial Aid to ensure withdrawals are reported timely.

Criteria: 34 CFR 685.304(b)(3) If a student borrower withdraws from school without the school?s prior knowledge or fails to complete the exit counseling as required, exit counseling must, within 30 days after the school learns that the student borrower has withdrawn from school or failed to complete the exit counseling as required, be provided either through interactive electronic means, by mailing written counseling materials to the student borrower at the student borrowers last known address, or by sending written counseling materials to an email address provided by the student borrower that is not an email address associated with the school sending the counseling materials. Condition: All Return of Title IV calculations for the year were selected for testing (15 total returns). Exit counseling for four of those students was performed more than 30 days after their withdrawal date. An additional student who had direct loans in previous terms also received their exit counseling more than 30 days after their withdrawal date. Context: The deficiency was discovered during the audit testing of Return of Title IV. Cause: The financial aid department was not notified of the withdrawal of these students within 30 days of their withdrawals and, as such, did not know they needed exit counseling. When they were notified of the withdrawals, the exit counseling was performed. Effect: Five students received exit counseling more than 30 days after their withdrawal from the College. Recommendation: We recommend regular meetings between the financial aid, business, and registration departments to ensure proper communication of information for withdrawing students. We recommend the meetings occur no less than monthly. Views of Responsible Officials: Management concurs with the auditor?s recommendation to improve communications between the Registrar?s office and Financial Aid to ensure withdrawals are reported timely and exit counseling is provided within 30 days of withdrawal.

Criteria: 34 CFR 668.22(j)(1) An institution 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 institution?s determination that the student withdrew. Condition: All Return of Title IV calculations for the year were selected for testing (15 total returns). One student?s return calculation contained a post-withdrawal disbursement due to how their aid was recorded in the College?s software. The College did not process the post withdrawal disbursement. Upon examination of the student?s file and the College?s records, it appeared that, instead, $1,095 in Pell grant funds should have been returned. Context: The deficiency was discovered during the audit testing of Return of Title IV. Cause: Management in the business office adopted a policy whereby the draws and returns in G5 did not agree to the disbursement rosters provided to the business office by the financial aid department. The result was the College was applying more in loan funds to the student accounts than it was drawing down from G5. This student had not been in contact with the College regarding her status for the spring semester and, as such, the College had purposely not drawn down loan funds for her in case she withdrew. However, the loans were packaged in the College?s software and showed as funds available for the student but not yet disbursed. When the return was processed in the software, this status created the post withdrawal disbursement. When the loans were removed from the calculation (since they had not yet been drawn down), the student had an R2T4 for her Pell grants which were drawn and applied to her student account. Effect: The College should have returned an additional $1,095 in Pell grant funds. Recommendation: We recommend the business office reevaluate its policy of not matching draws and returns in G5 with the disbursement rosters from the financial aid department for better ease of tracking. We also recommend the financial aid department institute a policy where all R2T4 calculations are reviewed by a second person to ensure any errors like this are caught and corrected. Views of Responsible Officials: The College?s process of drawing and returning G5 funds is consistent with what it has done in past years; G5 funds are disbursed to students and later drawn based on the College?s cash needs. While we understand that this process makes it difficult for the auditors to trace specific R2T4 transactions, the process is conservative as funds needing to be returned had not yet been drawn. The College will implement a procedure for secondary review of R2T4 calculations.

Criteria: 34 CFR 675.18(g)(1) For the 2000-2001 award year and subsequent award years, an institution must use at least 7 percent of the sum of its initial and supplemental FWS allocations for an award year to compensate students employed in community service activities. In meeting this community service requirement, an institution must include at least one - (i) Reading tutoring project that employs one or more FWS students as reading tutors for children who are preschool age or are in elementary school; or (ii) Family literacy project that employs one or more FWS students in family literacy activities. Condition: A listing of all federal work study payments for the period were reviewed along with the College?s Fiscal Operations Report and Application to Participate (FISAP). The Director of Financial Aid indicated which positions at the College represented community service compensation. With an award of $84,139 in federal work study funds, all of which were expended in the current year, we would expect community service earnings to be $5,890 (7 percent). We noted on the College?s listing as well as the FISAP, the total community service earned compensation was only $1,270 or approximately 1.5 percent. Context: The deficiency was discovered during the audit testing of federal work study. Cause: There was significant turnover in the financial aid department during the current year as well as insufficient monitoring of community service earnings. When the new personnel started at the College, they noted the community service compensation was below required amounts. An additional community service position was offered and advertised, but the College was unable to fill the position. Effect: The College should have at least an additional $4,620 in compensation for federal work study positions that were considered community service. Recommendation: We recommend the financial aid department work with payroll to monitor federal work study and community service earnings more closely. We recommend financial aid request and receive reports every payroll period of all federal work study earnings so timelier tracking of the program can be achieved. Views of Responsible Officials: COVID-19 impacted the College?s ability to fulfill the requirement for 7 percent of federal work study funding for community service and may again be impacted by this during the year ending June 30, 2021. The College is doing its best to fulfill the community service requirement during these unprecedented times.

Criteria: 34 CFR 668.22(g)(2) - Institutional charges are tuition, fees, room and board, and other educationally-related expenses assessed by the institution. Condition: All Return of Title IV calculations for the year were selected for testing (16 total returns). On one of the returns, tuition and fees were listed at the full-time student amounts. Per the student?s ledger, they were charged the part-time tuition and fee amounts for the semester. The ledger amounts are consistent with the student?s enrollment level and unofficial transcript. The use of the full-time tuition and fees amounts in the calculation resulted in the College returning $5,984 more in direct loan funds than was required. Context: The deficiency was discovered during the audit testing of Return of Title IV. Effect: The College returned $5,984 more in Parent PLUS loan funds than it should have. Cause: Students are all initially packaged at the full-time enrollment level. The enrollment and award amounts are then adjusted at the census date each semester. This student did not attend through the census date and, as such, the financial aid department was not aware the student was only part-time. Recommendation: We recommend the financial aid department always compare enrollment levels in the software to an updated student account ledger to ensure the institutional charges are correct. We also recommend the College consider a secondary review of all Return of Title IV calculations to ensure there are no significant errors. Views of Responsible Officials: The Financial Aid Office completed a thorough review of the PowerFAIDS R2T4 module and updated incomplete set-up parameters. Testing was performed on the automated calculations and compared against hand calculations made on the Treatment of Title IV Funds worksheet published by the US Department of Education to confirm accuracy. R2T4 process documentation was updated to include a cross-check of enrollment levels in both PowerFAIDS and PowerCAMPUS. A request has been made of the Registrar?s Office to standardize withdrawal notifications in order to allow easier identification of students requiring R2T4 calculations. Cross-training of existing financial aid office staff is currently underway. See Schedule of Findings and Questioned Costs for chart/table.

Criteria: 34 CFR 668.22(j)(1) An institution 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 institution?s determination that the student withdrew. Condition: All Return of Title IV calculations for the year were selected for testing (16 total returns). Two of the returns had Title IV funds returned beyond the 45 day requirement. In both instances, the R2T4 calculation was made timely and the original amount remitted within the required timeframe. However, after review of the transactions, the financial aid department discovered errors in those original calculations and made a corrective remittance. One corrective remittance for $10,266 was made 219 days after the student?s withdrawal date and a second corrective remittance for $4,195 was made 97 days after that student?s withdrawal date. The errors were caught by the financial aid department prior to the audit commencing. Context: The deficiency was discovered during the audit testing of Return of Title IV. Effect: The College held $14,461 in Parent PLUS loan funds that should have been returned. The funds were returned to the Department of Education, but not within required time limits. Cause: The initial calculations used an incorrect amount for institutional funds due to a misunderstanding of how earned tuition is calculated. When later reviewed, the financial aid department recalculated the returns and remitted the difference. Recommendation: We recommend that the College initiate retraining with all departments about the requirements of Title IV returns. We also recommend the College consider a secondary review of all Return of Title IV calculations to ensure there are no significant errors. Views of Responsible Officials: The Financial Aid Office completed a thorough review of the Power FAIDS R2T4 module and updated incomplete set-up parameters. Testing was performed on the automated calculations and compared against hand calculations made on the Treatment of Title IV Funds worksheet published by the US Department of Education to confirm accuracy. R2T4 process documentation was updated to include a cross-check of enrollment levels in both PowerFAIDS and PowerCAMPUS. A request has been made of the Regitrar?s Office to standardize withdrawal notifications in order to allow easier identification of students requiring R2T4 calculations. Cross-training of existing financial aid office staff is currently underway.

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