Biola UniversityNon-Profit

Finding 2019-001: Students not having proper verification processing regarding household size Type of Finding ? Deficiency and Non-Compliance U.S. Department of Education - Student Financial Aid Cluster ? CFDA # 84.063 and 84.268 (Federal Pell Grant Program and Federal Direct Student Loans) Award Year July 1, 2018 through June 30, 2019 Criteria: Pursuant to 34 CFR 668.54, institutions may be required to verify certain student information such as Adjusted Gross Income, US Income Tax Paid, Number of Family Members (including number of family members in the household who are enrolled as at least half-time students in postsecondary education institutions if that number is greater than one), and Untaxed Income and Benefits: Social Security benefits, child support, US income tax deduction for IRA payments, interest on tax-free bonds, foreign income excluded from US income taxation, earned income credit taken on tax return and all other untaxed income subject to US income tax reporting. Condition: Out of our sample of forty students selected for eligibility testing from a population of 1,015 students flagged by the Department of Education for verification, we noted that one student had their verification processed incorrectly. The student identified themselves as having 4 household members and 1 in college, however, the data entered into the Banner system was 3 household members and 1 in college. While this error was identified within the 120 days allotted for proper processing, this error was identified during the course of the audit. The student?s information was fully processed after identified. As such, we conclude that this is a finding. Questioned Cost: N/A as the finding was identified and corrected within the appropriate time frame. Cause: After further investigation by the University, this specific type of situation was due to human error. Effect: This resulted in the student receiving $1,200 less in Federal Financial Assistance. Recommendation: We recommend the University ensure that all student codes are proper per the database, and reviewed, to ensure that all students are receiving the proper amount of Financial Assistance. Views of Responsible Officials: Management acknowledged the finding and included its corrective action plan in the Single Audit report. The finding was due to human error, as the reviewer failed to update the specific data element in their system. In addition to their training plan and quality control process, beginning in FY20, the University has started using a new program, CampusLogic Student Forms, which provides a smart review of all verification files that reviews the FAFSA data elements against any documents submitted by a student.

Finding 2019-002: Return of Title IV funds not calculated correctly Type of Finding ?Deficiency and Non-Compliance U.S. Department of Education - Student Financial Aid Cluster ? CFDA: 84.063 and 84.268 (Federal Pell Grant Program and Federal Direct Student Loans) Award Year July 1, 2018 through June 30, 2019 Criteria: Per 34 CFR 668.22, returns of Title IV funds are required to be deposited or transferred into the SFA account or electronic fund transfers initiated to the Department of Education (ED) or the appropriate FFEL lender as soon as possible, but no later than 45 days after the date the institution determines the student withdrew. If a student withdraws during the semester, after the term start date and prior to 60% of the term being completed, the school must calculate the portion of Title IV funds that need to be returned to ED. The school must take the number of days completed divided by the total term length to arrive at the percentage of term completed or percentage of Title IV funds earned with the remaining disbursed funds to be returned to ED. Condition: In our sample selected for Return of Title IV Funds testing, five of our selections had funds returned (federal funds returned totaling $33,421) and of those five, two (representing federal funds returned of $9,469) had errors in the calculation related to the withdraw date used in determining number of days completed. The University had a population of 1,286 students who withdrew during the year with total Pell funds of $467,706 and total FDL funds of $3,322,727 distributed to those students during the year. Questioned Cost: $43 Cause: After further investigation by the University, this specific situation was caused by inputting the incorrect date for the withdrawal date. In both cases, the University entered a withdrawal date which was off by 1 day from the date that the student submitted their withdrawal form or letter. Effect: The impact of the above cause is that the return of Title IV funds were not calculated correctly, with one return of funds being too high and the other too low. One return had a date entered one day after withdrawal, resulting in a shortfall returned amount of $90 with the second entry being one day prior to the actual letter of withdrawal resulting in an excess of $47 being returned. Recommendation: We recommended the University implement processes to ensure that all returns of Title IV funds calculations be reviewed by a secondary reviewer to ensure the withdrawal date matches the withdrawal form or letter submitted by the student. Views of Responsible Officials: Management acknowledged the finding and included its corrective action plan in the Single Audit report. The finding was due to human error. Management has re-engaged in training of their staff relevant to these procedures. Additionally, management has implemented an extra step of recording the last day of attendance on all communications from students to ensure the date is entered correctly on the student record.

Finding 2019-003: Cash Management Return of Funds- Direct Loans and Federal Work-Study Type of Finding ? Deficiency and Non-Compliance U.S Department of Education - Student Financial Aid Cluster ? CFDA #84.268 and #84.033 (Federal Direct Student Loans and Federal Work-Study Program) Criteria: Per 34 CFR 668.166, the University has elected to use the reimbursement method for all of its federal student financial assistance programs, including direct loans. Based on management's chosen method, the Department of Education (ED) sets an initial Current Funding Level (CFL) against which the University can draw funds. All program costs are incurred and paid for by the University. On a periodic basis, the University initiates a drawdown for reimbursement of funds advanced to the students? accounts. As the University reaches the Current Funding Level, the ED may authorize additional draw down amounts. Historically, the University initiates a reimbursement request lower than the amount advanced to the students? accounts. The University does this as management anticipates that students may withdraw from classes, which would require the University return funds awarded to the extent required under "Return of Title IV" calculations. Per the 2019 Compliance Supplement, the excess cash balance tolerance is allowed if that balance (1) is less than 1% of prior-year drawdowns and (2) is eliminated within the next 7 calendar days (34 CFR 668.166(a) and (b)). Condition: The University initiated 10 fund drawdowns under the Direct Loan program during the FY18-19 fiscal year. We noted that on their last direct draw down of $2.75 million on February 13, 2019 that this draw brought their cumulative draws to $39.1 million for the fiscal year. However, at that time only $37.6 million had been advanced to students. As such, the University had overdrawn their advances by $1.5 million for this period, which exceeded the allowable 1% of prior-year drawdown. Additionally, while this excess withdrawal was identified in management?s review process, the funds were not returned in the allotted 7 day timeframe, as the $1.5 million was not received by the ED until March 21, 2019. The University initiated three fund drawdowns under the Federal Work-Study program during the FY18-19 fiscal year. We noted that on their last direct draw down of $250,000 on January 16, 2019 that this draw brought their cumulative draws to $427,500 for the fiscal year. However, at that time only $337,338 had been advanced to students. As such, the University had overdrawn their advances by $90,162 for this period which exceeded the allowable 1% of prior-year drawdowns. Additionally, while this excess withdrawal was identified in management?s review process, the funds were not returned in the allotted 7 day timeframe, as the $90,162 amount was fully used by the Federal Work-Study program as of the February 5, 2019 payroll date, 20 days after the excess drawdown occurred. Questioned Cost: None Cause: After further investigation by the University, this specific instance was a situation where the accounting staff was performing additional tasks, as they were taking on some additional work due to unexpected departures within the accounting department. As such, the review was not performed timely and thus the funds were not returned to the correct account in a timely manner. Effect: The impact of the above cause is that the ED had funds returned to them after the allowable time frame expired. Recommendation: We recommend that the University ensure all review processes are performed timely to avoid unnecessary delays in the returning of funds in the event that excess funds were withdrawn. Additionally, performing these reviews prior to the submission is the best course of action going forward. Views of Responsible Officials: The University acknowledged the finding and included its corrective action plan in the Single Audit report. The finding was due to human error. Management has conducted retraining of both the preparer and reviewer of drawdown requests, emphasizing the need to do a slow, thorough review prior to submitting the drawdown. The worksheet used to calculate the amount available for drawdown has been revised to highlight the proper lines showing the amount available for drawdown versus the requested amount.

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