California Institute of Integral Studies

FINDING NO. 2020-001 Statement of Condition Institution personnel did not adequately perform timely, accurate and complete reconciliations and analyses of subsidiary ledgers. The most significant areas of deficiency pertained to the Institution?s unearned tuition, accrued expenses, fixed assets, accounts receivable and pledges receivable. As a result, numerous post-closing adjustments were necessary to properly state the Institution?s financial statements as of and for the year ended June 30, 2020. Criteria Management is responsible for performing timely, accurate and complete reconciliations and analyses of subsidiary ledgers. Internal controls in place should also be adequate to prevent, or detect and correct misstatements in the financial statements on a timely basis. Effect Adjustments resulting from audit procedures performed served to decrease the Institution?s net assets by approximately $3.4 million as of June 30, 2020 (a 54.8% reduction to the unaudited change in net assets for the fiscal year). In addition, the lack of timely reconciliations creates the risk that errors or discrepancies will go unnoticed for extended periods of time. An increased opportunity for fraud also exists if there is inadequate oversight of the general ledger accounts. Cause Before and during the audit period, the Institution recognized compliance issues within multiple departments and began making necessary changes including Finance/Accounting, Financial Aid and Human Resources, resulting in high turnover. And, of further impact, the Institution?s accounting system was unable to access certain historical data and financial records and reports for the period. Recommendation The Institution should have a designated individual who is well-versed and experienced in reporting under Accounting Principles Generally Accepted in the United States of America (GAAP) to oversee the performance of timely, accurate and complete reconciliations and analyses of subsidiary ledgers. Management must also be capable of understanding and fully utilizing its accounting system to produce the necessary reports and records. Institution Comments The Institution agrees with the finding. CIIS recognized the system deficiencies and began evaluating and then implementing a new Enterprise Resource Planning (ERP) system, Ellucian-Colleague, to provide an integrated student and financial system that will significantly strengthen accuracy, data integrity, reporting and internal control. Staffing changes were also initiated before and during the audit period: a new Vice President of Finance; addition of a Director of Financial Planning & Analysis; replacement of the Director of Financial Aid; addition of Senior Financial Aid staff and supporting positions.

FINDING NO. 2020-002: Common Origination and Disbursement system (COD) Discrepancy - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition An FDLP disbursement date in the Common Origination and Disbursement system (COD) did not match the Institution?s student account record. Criteria Reconciliation of student disbursement data and/or transmission adjustments of rejected records are required to be submitted to COD within 15 days of payment or of the Institution becoming aware of the need to make an adjustment. Additionally, FDLP disbursement dates in COD are required to match the Institution?s records (34 CFR 668.164(a) and 34 CFR 690.83). Effect Of 116 FDLP records tested, 1 student?s Federal Direct Loan Program disbursement date in COD differed from the Institution?s student account record. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause In this instance of noncompliance, the Institution did not complete reconciliation of FDLP disbursement dates in COD with the Institution?s records. Recommendation The Institution should adhere to its policies of reconciliation of FDLP disbursement dates in COD with the Institution?s records. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-003: Incorrect Enrollment Statuses Reported to NSLDS - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition The Institution reported the enrollment statuses to the National Student Loan Data System (NSLDS) for certain students in error. Criteria Institutions are required to accurately report a student?s changes in enrollment status and notify NSLDS within 60 days of a student?s change in enrollment status. The Institution may utilize a Roster file (formerly called the Student Status Confirmation Report) for notification if the report will be submitted within 60 days of the status change. Accurate and timely reporting of student status changes is essential because the last day of attendance on at least a half-time basis triggers the beginning of the borrower?s grace period. Incorrect reporting of student status changes may result in federal interest subsidies being paid toward loans that should be in repayment and are no longer eligible for the subsidies. (34 CFR 685.309(b)). Effect Of 116 FDLP files tested, the enrollment statuses for 2 students were reported incorrectly to NSLDS. Additionally, 1 student enrollment status effective date was not reported in a timely manner. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution?s procedures with respect to accurate and timely reporting to NSLDS of borrowers? enrollment status changes were not always closely followed. Recommendation The Institution should more closely follow its procedures to ensure that student enrollment status changes are reported timely and correctly to NSLDS. Additional Information Upon learning of this finding, the Institution corrected the enrollment statuses in NSLDS for the 2 students. We reviewed the revised documents and determined that they were accurate. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-004: Ineligible Federal Supplemental Educational Opportunity Grant (FSEOG) Disbursements ? Significant Deficiency in Internal Control and Instances of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition FSEOG disbursements were made to certain students who were not eligible at the time of the disbursement. Criteria An institution may make a late disbursement of an FSEOG award no later than 180 days after the date that the recipient became ineligible for the grant and must have awarded the student the FSEOG prior to the last day of attendance. (34 CFR 676.20). Effect In 3 of 18 FSEOG files tested, 2019-20 FSEOG disbursements were made more than 180 days after the students? last day of attendance. For two students, the last day of attendance was December 16, 2019, and FSEOG awards in the amount of $1,334 were posted to each student?s account on October 6, 2020. Student No. 3 graduated on February 25, 2020. An FSEOG award in the amount of $1,501 was posted to the student?s account on October 6, 2020. Total questioned costs are $4,169. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause In these instances of noncompliance, the Institution failed to adequately verify the students? eligibility for Title IV funds prior to disbursement of awards. Recommendation The Institution should follow its procedures to ensure that student recipients meet all eligibility requirements prior to disbursement of funds. Additional Information Upon learning of this finding, the Institution voided the $4,169 FSEOG disbursements from the 3 students? accounts and reallocated the funds to 3 eligible students. We reviewed the documentation and found it to be accurate. There are no remaining questioned costs associated with this finding. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-005: Late Refunds ? Significant Deficiency in Internal Control and Instances of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition Return of Title IV funds payments for certain students were not made in a timely manner. Criteria The U.S. Department of Education requires that refunds made electronically under the Return to Title IV funds provisions be returned within 45 days of a student?s official withdrawal date and clear the bank within 45 days of the student?s official withdrawal date to be considered timely. (34 CFR 668.22.) Effect Return of Title IV funds payments were not paid within the required time frame for 2 of the 18 withdrawn student files tested for refund compliance. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting these instances of non-compliance. Therefore, this finding represents a significant deficiency in internal control. The late payments associated with this finding are as follows: Student No. Amount of Refund Program Paid Withdrawal Date Refund Due Date Refund Date Days Late 1 $ 3,432 FDLP 10/16/19 11/30/19 3/12/20 103 2 922 FPLUS 9/23/19 11/7/19 12/18/19 41 Cause In these instances of noncompliance, the Institution?s internal control did not function as designed and therefore the Institution?s procedures for processing refunds and Return of Title IV funds payments were not always followed. Recommendation The Institution should take steps to ensure that its procedures for the timely disbursement of refunds and Returns of Title IV funds payments are strictly followed. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-006: Late Return of Ineligible Funds ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition Ineligible funds were not returned in a timely manner for one student. Criteria Ineligible disbursements credited to student accounts are to be returned to the appropriate Title IV program within 30 days of the later of the determination date or the date the funds were delivered to the student?s tuition account. (34 C.F.R. 668.21). Effect In 1 of 120 files tested, ineligible Title IV funds were not returned within the required time frame. The student received overpayments in the amounts of $2,721 sub and $3,463 unsub on October 18, 2019 because both payments were due to be disbursed in the Spring term. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. The payment associated with this finding is as follows: Title IV Program Amount Due Due Date Date Returned FDLP $ 6,184 11/17/19 12/18/19 Cause In this instance of noncompliance, the Institution?s internal control did not function as designed and therefore, procedures to ensure timely returns of ineligible funds were not followed. Recommendation The Institution?s control procedures for processing ineligible funds payments should be closely followed. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-007: Late and Missing Exit Counseling - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition Federal Direct Loan Program (FDLP) exit counseling was not always performed in a timely manner. Criteria All institutions must conduct exit counseling to inform each FDLP borrower of their rights and obligations as a borrower within 30 days of the official withdrawal or graduation date determined by the institution. Documentation of the exit counseling must be maintained in each borrower?s file. (34 C.F.R. 685.304(b)). Effect In 1 of 116 FDLP files tested, the documentation indicated that exit counseling was not performed in a timely manner. In addition, the documentation of loan exit counseling was missing for 1 student. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting these instances of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution's procedures for counseling FDLP borrowers in a timely manner were not always applied. Recommendation The Institution should adhere to its procedures with respect to providing borrowers with FDLP exit counseling in a timely manner and maintaining documentation in the student files. Additional Information Upon learning of this finding, the Institution mailed the exit counseling documents to Student No. 2. We reviewed the documentation and found it to be accurate. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-008: Federal Pell Grant Underpayment ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition One student was underawarded in Federal Pell Grant funds. Criteria An institution is required to pro-rate Federal Pell award amounts, perform need analysis calculations, and review prior aid history to ensure that students are appropriately awarded. (34 CFR 690.79.) Effect In 1 of 21 Federal Pell Grant files tested, the student was underawarded in 2019-20 Federal Pell Grant funds in the amount of $986. The student was underpaid due to a change in enrollment status. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause In this instance of noncompliance, internal control did not function as designed and the Institution did not follow its procedures with respect to the awarding of Title IV funds. Recommendation The Institution should closely follow its procedures to ensure that students are appropriately awarded. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2020-009: Direct Loan School Account Statement (DL SAS) Not Available ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2019-20 Statement of Condition The Institution did not provide the monthly Direct Loan School Account Statements (DL SAS) for auditor test work for the months of August 2019 through January 2020. Criteria Institutions participating in the Federal Direct Loan Program are required to perform monthly reconciliations. Institutions must reconcile the funds received from G5 with actual disbursement records submitted to the Common Origination Disbursement (COD) system and the institution?s accounting records. Each month, COD sends the institution a School Account Statement (SAS), which is ED?s official record of the institution?s cash and disbursement records and identifies any differences between the net draws from G5 and the actual disbursement information reported to COD. (34 C.F.R. ? 685.300(b)(5)). Effect The Institution could not obtain the monthly DL SAS from August 2019 through January 2020 for auditor test work. As such, we were unable to ascertain whether Direct Loan funds were reconciled in a timely manner. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution did not always comply with compliance requirements set forth in regulation with respect to Direct Loan reconciliation. Recommendation The Institution needs to comply with compliance requirements set forth in regulation and other U.S.D.E. guidance with respect to monthly reconciliation of its Direct Loan School Account Statements with Direct Loan cash receipts. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-001 Statement of Condition Institution personnel did not adequately perform timely, accurate and complete reconciliations and analyses of subsidiary ledgers. The most significant areas of deficiency pertained to the Institution?s accrued expenses, fixed assets, accounts receivable and pledges receivable. As a result, numerous post-closing adjustments were necessary to properly state the Institution?s financial statements as of and for the year ended June 30, 2019. Criteria Management is responsible for performing timely, accurate and complete reconciliations and analyses of subsidiary ledgers. Internal controls in place should also be adequate to prevent, or detect and correct misstatements in the financial statements on a timely basis. Effect Adjustments resulting from audit procedures performed served to decrease the Institution?s net assets by approximately $200,000 as of June 30, 2019. In addition, the lack of timely reconciliation creates the risk that error or discrepancies will go unnoticed for extended periods of time. An increased opportunity for fraud also exists if there is inadequate oversight of the general ledger accounts. Cause During the year ended June 30, 2019, the Institution experienced a high level of personnel turnover in its accounting department and significant personnel changes were completed in Financial Aid during the audit period. And, of further impact, the Institution?s accounting system was unable to access certain historical data and financial records and reports for the period. Recommendation The Institution should have a designated individual who is well-versed and experienced in reporting under Accounting Principles Generally Accepted in the United States of America (GAAP) to oversee the performance of timely, accurate and complete reconciliations and analyses of subsidiary ledgers. Management must also be capable of understanding and fully utilizing its accounting system to produce the necessary reports and records. Institution Comments The Institution agrees with the finding and has hired a Vice President of Finance, a Director of Financial Planning & Analysis, a Director of Financial Aid and multiple supporting staff. The Institution is also in the process of implementing a new accounting system (Colleague). Institution personnel are being trained on the new accounting system and will be capable of fully utilizing the system to produce the reports and records necessary for accurate financial reporting. The system, when fully implemented, will provide an integrated management system that will significantly strengthen accuracy, reporting and internal control.

FINDING NO. 2019-002: Common Origination and Disbursement system (COD) Discrepancy - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Reconciliation of FDLP disbursement dates in the Common Origination and Disbursement system (COD) with the Institution?s records was not always performed. Criteria Reconciliation of student disbursement data and/or transmission adjustments of rejected records are required to be submitted to COD within 15 days of payment or of the Institution becoming aware of the need to make an adjustment. Additionally, FDLP disbursement dates in COD are required to match the Institution?s records (34 CFR 668.164(a) and 34 CFR 690.83). Effect Of 123 FDLP records tested, 6 students? Federal Direct Loan Program disbursement dates in COD differed from the Institution?s records. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution did not always complete reconciliation of FDLP disbursement dates in COD with the Institution?s records. Recommendation The Institution should adhere to its policies of reconciliation of FDLP disbursement dates in COD with the Institution?s records. Additional Information Upon learning of this finding, the Institution corrected COD to reflect students? ledger disbursement dates. We reviewed the documentation and found it to be accurate. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-003: Incorrect Refund Calculations - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Return of Title IV funds calculations were not always completed correctly when students withdrew from the instructional program. Criteria Refunds for withdrawn students are to be properly calculated in accordance with applicable refund policies. (34 CFR 668.22). Effect Of 18 files tested for refund calculation accuracy, 2 student files contained an incorrect refund calculation and in 2 student files required refund calculations had not been performed. For Student Nos. 1 and 2, the Return of Title IV funds calculation did not contain the correct number of days in spring break. For Student Nos. 3 and 4, the Return of Title IV funds calculations were not completed when the students withdrew from their academic courses. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting these instances of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause Procedures to ensure the proper completion of refund calculations and appropriate payment of resulting refunds due were not always followed. Recommendation Due diligence and care must be exercised in completing refund calculations in accordance with SFA program requirements. Additional Information Upon learning of this finding, the Institution recalculated the Return of Title IV funds payment calculations using the correct data for Student Nos. 1 and 2. The recalculations resulted in no additional refunds due. For Student Nos. 3 and 4, the Institution performed the Return of Title IV funds calculations. The calculations resulted in refunds due in the amount of $1,784 due to the student?s Federal Direct Subsidized Loan and $3,463 due to the Federal Direct Unsubsidized Loan Program for Student No. 3 and $393 due to the student?s Federal Direct Grad PLUS loan for Student No. 4. Total questioned costs are $5,640. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-004: Incorrect Enrollment Statuses Reported to NSLDS - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition The Institution reported the enrollment statuses to the National Student Loan Data System (NSLDS) for certain students in error. Criteria Institutions are required to accurately report a student?s changes in enrollment status and notify NSLDS within 60 days of a student?s change in enrollment status. The Institution may utilize a Roster file (formerly called the Student Status Confirmation Report) for notification if the report will be submitted within 60 days of the status change. Accurate and timely reporting of student status changes is essential because the last day of attendance on at least a half-time basis triggers the beginning of the borrower?s grace period. Incorrect reporting of student status changes may result in federal interest subsidies being paid toward loans that should be in repayment and are no longer eligible for the subsidies. (34 CFR 685.309(b)). Effect Of 123 FDLP files tested, the enrollment statuses for 5 students were reported incorrectly. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution?s procedures with respect to accurate and timely reporting to NSLDS of borrowers? enrollment status changes were not always closely followed. Recommendation The Institution should more closely follow its procedures to ensure that student enrollment status changes are reported timely and correctly to NSLDS. Additional Information Upon learning of this finding, the Institution corrected the enrollment statuses in NSLDS for the 5 students. We reviewed the revised documents and determined that they were accurate. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-005: Title IV Disbursements Exceed Cost of Attendance (COA) - Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Institutional charges were not accurately included in the cost of attendance (COA) used to determine award amounts for certain students. Criteria The COA (for loan purposes) must be based on like periods of time and correspond to an appropriate period of enrollment for the student. Use of the COA is essential for determining a student's eligibility for loan proceeds (34 CFR 686.21(c)). Effect In 5 of 125 files tested, there were discrepancies in institutional charges, specifically in the tuition and/or fee components, used to determine students? initial eligibility for Federal Direct Loan awards and the accurate components. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution?s internal control did not function as designed. The Institution did not always follow its procedures with respect to the awarding and delivery of Title IV funds. Recommendation The Institution should monitor its procedures to ensure that students are appropriately awarded, and funds are delivered, in accordance with applicable rules and regulations. Additional Information Upon learning of this finding, the Institution provided recalculated packaging worksheets for the students in this finding using the correct data. We reviewed the revised calculations and determined that Student No. 1 was overawarded in the amount of $5,814 in Federal Direct Unsubsidized Loan funds. Student No. 2. was overawarded in the amount of $2,664 in Federal Direct Unsubsidized Loan funds. Student No. 3 was overawarded in the amount of $990 in Federal Direct Unsubsidized Loan funds. Student No. 4 was overawarded in the amount of $7,127 in Federal Direct Unsubsidized Loan funds and Student No. 5 was overawarded in the amount of $4,660 in Federal Direct Unsubsidized Loan funds. Total questioned costs are $21,255. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-006: Aggregate Loan Limits ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition One student received Federal Direct Loan Program (FDLP) proceeds in excess of the aggregate loan limits. Criteria A determination of need for a Federal Direct Subsidized Loan and Federal Direct Unsubsidized Loan must include a review of the student?s prior loan history to ensure that the application for funding does not exceed established aggregate loan limits (34 CRR 685.203). Effect In 1 of 123 FDLP files tested, the student received Federal Direct Subsidized Loan funds in the amount of $499 in excess of the aggregate loan limit. Total questioned costs are $499. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution did not follow its procedures for reviewing prior loan history as a part of the loan certification process. Recommendation The Institution should closely follow its procedures to ensure that students are appropriately awarded. Additional Information The Institution, upon learning of this finding, returned $499 to the Federal Direct Subsidized Loan Program on behalf of the student. We reviewed the documentation and found it to be accurate. There are no remaining questioned costs associated with this finding. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-007: Ineligible Disbursement due to Incorrect Awarding ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition A Federal Supplemental Educational Opportunity Grant (FSEOG) award was made to one student who did not qualify for FSEOG funds per the Institution?s award packaging policy and Federal requirements. Criteria The Institution is required to award Title IV funds only to students who meet the specific eligibility requirements. (34 CFR 676.20). FSEOG awards must first be made to students with the greatest financial need as determined by the student?s Expected Family Contribution (EFC) in the award packaging cohort. Effect Of 125 files tested, 1 student received funds though not eligible at the time of the disbursement. The student?s EFC of 8569 was outside of the eligible EFC range. The student received FSEOG in the amount of $800. Total questioned costs are $800. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution failed to adequately verify the student?s eligibility for Title IV funds prior to disbursement of awards. Recommendation The Institution should follow its procedures to ensure that student recipients meet all eligibility requirements prior to disbursement of funds. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-008: Missing EFT Notifications ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Students were not properly notified when Federal Direct Loan disbursements were received through electronic funds transfer and credited to the student?s account. Criteria It is the responsibility of the Institution to ensure that the student is notified within 30 days when a loan disbursement is credited to the student?s account through electronic fund transfer. (34 CFR 668.165(a)). Effect In 123 of 123 FDLP files tested, student loan disbursement notifications were not available. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting instances of non-compliance. Also, during our test of internal control over EFT notification, we noted that the Institution does not have policies and procedures in place with respect to EFT notifications. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution?s procedures with respect to the documentation and notification to students of loan disbursements were not applied during the audit period. Recommendation The Institution should follow its procedures to ensure students are notified when loan disbursements are received via electronic transfer and directly credited to the students? tuition accounts. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-009: Gramm-Leach Bliley Act Policy ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition The Institution did not comply with provisions contained in the Gramm-Leach-Bliley Act (GLBA). Criteria The GLBA (16 CFR 314.4 (b)) includes specific compliance requirements designed to enhance the security of student information maintained electronically by institutions of higher education, as well as third party servicers and other vendors who may require sensitive student information to perform their duties. The compliance requirements include the designation of an individual to coordinate the information security program, periodic risk assessment in three specific areas, and designing and documenting safeguards for identified risks. Effect The Institution was unable to demonstrate compliance with the GLBA, specifically by identifying an individual responsible for coordinating the information security program or performing a risk assessment during the audit period that addressed the three required areas described in 16 CFR 314.4 (b). The three areas are: Employee training and management; information systems, including network and software design, as well as information processing, storage, transmission and disposal; and, detecting, preventing and responding to attacks, intrusions, or other systems failures. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause While the Institution has in place information systems security protocols and personnel, the Institution had not implemented the specific requirements contained in the GLBA. Recommendation The Institution needs to design and implement a periodic risk assessment process in the three areas described in 16 CFR 314.4 (b), create and document safeguards for identified risks, and designate an individual responsible for coordinating the Institution?s information security program. Additional Information Upon learning of this finding, the Institution implemented the specific requirements contained in the GLBA. We reviewed the documentation and found it to be accurate. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-010: Direct Loan School Account Statement (DL SAS) Not Available ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition The Institution did not provide the monthly Direct Loan School Account Statements (DL SAS) for auditor test work. Criteria Institutions participating in the Federal Direct Loan Program are required to perform monthly reconciliations. Institutions must reconcile the funds received from G5 with actual disbursement records submitted to the Common Origination Disbursement (COD) system. Each month, COD sends the institution a School Account Statement (SAS), which is ED?s official record of the institution?s cash and disbursement records and identifies any differences between the net draws from G5 and the actual disbursement information reported to COD. (34 C.F.R. ? 685.300(b)(5)). Effect The Institution could not obtain the monthly DL SAS from July 2018 through June 2019 for auditor test work. As such, we were unable to ascertain whether Direct Loan funds were reconciled in a timely manner. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. Cause The Institution did not always comply with compliance requirements set forth in regulation with respect to Direct Loan reconciliation. Recommendation The Institution needs to comply with compliance requirements set forth in regulation and other U.S.D.E. guidance with respect to monthly reconciliation of its Direct Loan School Account Statements with Direct Loan cash receipts. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-011: FWS Discrepancies ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Federal Work Study (FWS) timesheets were not always consistent with the disbursement records. Criteria Under FWS guidelines, records must include a certification, signed by the student?s supervisor (an official of the school or off-campus agency), that the student has worked and has earned the amount being paid. For students paid on an hourly basis, the certification must include or be supported by a time record showing the hours worked in clock-time sequence or the total hours worked per day. FWS records must also include documentation of the date and amount of each payment of Federal Work Study wages. (34 CFR 675.9). Effect Of 5 FWS files tested, 2 students had FWS disbursements that did not correspond with the amount earned for hours worked. The Institution?s internal control over the related compliance requirement did not function as designed and was not effective in detecting this instance of non-compliance. Therefore, this finding represents a significant deficiency in internal control. The students received the following FWS funds for the period in question: Student No. Total Hrs. Actual Total Hrs. Paid Rate Amount Paid Amount Earned Amount Overpaid 1 63.50 506.16 $ 15.00 $ 7,592.40 $ 952.50 $ 6,639.90 2 170.31 173.80 15.00 2,607.00 2,554.65 52.35 We noted that the Institution was granted a U. S. Department of Education waiver of the Institutional share, as such, total questioned costs are $6,692.25. Cause The Institution did not always adhere to its procedures with respect to verification of hours worked versus hours paid and amount earned for FWS students. Recommendation The Institution should adhere to its procedures and not disburse FWS funds without appropriate verified documentation of hours worked and amount earned. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

FINDING NO. 2019-012: FISAP Discrepancies ? Significant Deficiency in Internal Control and Instance of Non-Compliance Federal Program: Student Financial Assistance Cluster Federal Agency: U. S. Department of Education Award Year: 2018-19 Statement of Condition Discrepancies were noted in the Institution?s 2018-19 Fiscal Operations Report and Application to Participate (FISAP). Criteria The FISAP is a report that institutions submit annually for the award year ending during the institution?s fiscal year that accounts for program activity during that period and to apply for future funding in the campus-based programs (FSEOG, Federal Perkins Loans, and Federal Work Study). Institutions must submit the FISAP on or before the deadline date established annually in the Federal Register. Effect During our tests of Federal reporting requirements, we noted the following differences between data reported in the FISAP and the actual data, as follows: Part IV, Section B. No. 2 ? FWS funds transferred to and spent in FSEOG: $14,922. We noted that the Institution drew down FWS funds in the amount of $14,922 on October 10, 2019. The funds were paid to FWS students. Part V, Section B. No. 4 ? FWS funds transferred to and spent in FSEOG: As described above, $14,922 in FWS funds was not transferred to and spent in FSEOG. As such, No. 4 should be zero. Part V, Section B. No. 7 ? 2017-18 FWS funds carried forward and spent in 2018-19: $30,192. The Institution did not draw down 2017-18 FWS funds during the year ended June 30, 2019, based on the Institution records and G5 draws. Part V, Section C. No. 12 (a) ? Total Earned Compensation for FWS Program: $110,095. Total earned compensation in the 2018-19 award year as reported in the SEFA and documented by the G5 draws was $131,499. Part V, Section D. No. 14 and 14 (b) ? Total Federal share of FWS earned compensation: $110,095. Total Federal share per G5 draws and Institution records: $131,499. Part VI, Section A. No. 24 ? Total number of FWS recipients in the 2018-19 award year: 57. The actual number of FWS recipients per the Institution?s records in the 2018-19 award year was 35. Cause The Institution did not adequately review its records and supporting documentation prior to completing the annual FISAP report. Recommendation The Institution should follow its procedures to ensure that all reports associated with the Title IV programs are submitted accurately and in a timely manner. Institution Comments The Institution concurs with the finding. Details to ensure compliance and prevent reoccurrence are described in the accompanying Corrective Action Plan.

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