Vanguard University of Southern California and Affiliates

FINDING 2024-001 – Special Tests and Provisions – Return of Title IV Funds – Significant Deficiency in Internal Controls Over Compliance (See table in "Schedule of Findings and Questioned Costs.") Criteria: The regulations 34 CFR 668.22 notes when a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance, the University must perform an R2T4 calculation to determine the amount of Title IV aid earned by the student. If the amount disbursed to the student is greater than the amount the student earned, the unearned funds must be returned. Additionally, there are specified communications required to be given to the student by the school per 34 CFR 668.22(3)(a). Condition/context: We selected a sample of 22 students out of a population of 168 that were identified by the University as having received some federal assistance and withdrew from the University during the year under audit. We believe this to be a representative sample of the population. We found one student had dropped all Spring 2024 courses during the beginning of the term but an R2T4 calculation was not performed when the University determined the withdraw on January 12, 2024. As there was no R2T4 calculation performed in January 2024, the University did not communicate timely to the student or return funds within the required time period. The University communicated to the student five months later to begin the return process. Questioned costs: No questioned costs were identified as part of this finding. Cause: The R2T4 calculation was not completed within 30 days of the date of withdraw due to ineffective and incorrect tracking of the student’s courseload changes. Effect: The lack of an R2T4 calculation being performed when the University became aware of the student’s withdraw caused delay in returning federal funds and required communications to the student. Repeat finding: This is not a repeat finding. Recommendation: We recommend the University ensure controls in place are followed and monitored to ensure R2T4 calculations are performed and reviewed timely. Views of responsible officials: Management agrees with the finding. A corrective action plan has been created by management and is included in the following section.

FINDING 2024-001 – Special Tests and Provisions – Return of Title IV Funds: Significant Deficiency in Internal Controls Over Compliance Corrective Action Plan: A traditional undergraduate who withdrew did not have an R2T4 calculation completed within 30 days of withdrawal and federal funding was not returned within 45 days of withdrawal. The withdrawal process by the student and academic staff was not completed according to process or timeframe. The course deregistration and withdrawal process for a traditional undergraduate student did not occur following standard procedures or timeframe. The Registrar’s Office entered two different course deregistration dates, within the two-week add/drop period, into the student information system and the withdrawal was entered nearly 60 days after the first day of class. The withdrawal and leave of absence reports generated daily and enrollment adjustment report generated weekly had inadequate queries to catch this complicated course deregistration and withdrawal situation to trigger timely R2T4 calculation and return of federal funding. Following this finding, the Financial Aid Office identified the reporting deficiencies and started dialog with the Registrar’s Office and Information Technology regarding student information system screens and fields being used by the Registrar’s Office that need to be adjusted on the reports. The Registrar’s Office understands the interdependency between its office and the Financial Aid Office with regards to enrollment adjustments and completing an R2T4 calculation, returning federal funding, monitoring Common Origination and Disbursement transmission and any necessary communication with students. With daily and weekly monitoring of said reports, and the Registrar’s Office proactively notifying the Financial Aid Office of any enrollment adjustments that are nearing the R2T4 deadlines rather than solely relying on reports, the Financial Aid Office will be positioned to be compliant with the federal deadlines. The Financial Aid Office will begin a two-person review of calculation and funding return and a recorded acknowledgement of such. Name of Contact Person: Kim Johnson, Vice President for Enrollment Management, 714-966-5415 Projected Completion Date: Review of all fall 2024 enrollment adjustment/withdrawal/leave of absence students after the first day of class (August 26, 2024) will be done by the vice president for enrollment management (serving as director of financial aid) and assistant director during November 2024. Going forward, said two-person review will be done daily by the assistant director and at a minimum biweekly by a senior manager.

FINDING 2024-002 – Special Tests and Provisions – Enrollment Reporting: Significant Deficiency in Internal Control Over Compliance (See table in "Schedule of Findings and Questioned Costs.") Criteria – The National Student Loan Data System (NSLDS) is the Department of Education’s (ED’s) centralized database for students’ enrollment information. It is the University’s responsibility to update this information timely and accurately when the enrollment status of a student that has received federal aid changes. 34 CFR section 685.309(b)(2): Unless it expects to submit its next updated enrollment report to the Secretary within the next 60 days, a school must notify the Secretary within 30 days after the date the school discovers that: 1. A loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a halftime basis or failed to enroll on at least a half-time basis for the period for which the loan was intended; or 2. A student who is enrolled at the school and who received a loan under title IV of the Act has changed his or her permanent address. Condition/context – From a system generated population of 658 students who received federal aid and either graduated, withdrew, changed their permanent address, or dropped during the year ended June 30, 2024, we selected a sample of 60 students. We believe this to be a representative sample of the population. The enrollment information and withdrawal or graduation date per the University’s records were compared to the information reported to NSLDS in order to determine if status changes were reported accurately and within the required timeframes. Of the 60 students who graduated, had an address change, or withdrew, one was not reported to the NSLDS within the required timeframe and had an incorrect status reported to the NSLDS. Questioned costs: No questioned costs were identified as part of this finding. Cause – The University’s controls did not capture student status change timely. Effect – The NSLDS database did not include all accurate information in the timeframe required by ED. This information is utilized by ED, the Direct Loan program, lenders, and other institutions to determine inschool status, deferment, and grace periods of student loans. Incorrect information could result in incorrect deferment, grace periods, billing, and repayment of student loans. Repeat finding – This is not a repeat finding. Recommendation: We recommend the University develop additional procedures to monitor the accuracy of information reported to NSLDS. One additional monitoring control could be to review a sample of students within NSLDS after each roster file response to ensure that the enrollment status is accurate. Each institution has access to correct information directly within NSLDS at any time. Views of responsible officials: Management agrees with the finding. A corrective action plan has been created by management and is included in the following section.

FINDING 2024-002 – Special Tests and Provisions – Enrollment Reporting: Significant Deficiency in Internal Control Over Compliance Corrective Action Plan: An undergraduate student in a year-round program was reported to National Student Clearinghouse (NSC) as a student for whom summer term was nonstandard. Non-standard summer term students are not reported to NSC over summer if they are not enrolled. Since this student was in a year-round program, the student should have been reported with summer as a standard term. Based on Vanguard’s NSC transmission schedule, had this student’s NSC Branch been classified correctly, the student would have been in a NSC transmission standard term data file and reported within 30 days of the enrollment adjustment. Annually, the Registrar’s Office will review all programs to ensure that year-round program students are reported to NSC with summer as a standard term. The assistant registrar who is responsible for both NSC reporting and updating program degree audits will manage this process with the dean of academic records oversight. The Registrar’s Office will create a column in the annual degree audit log that indicates standard/non-standard classification has been properly determined and set up correctly in the student information system for accurate reporting to NSC. A sample set of students within each NSC transmission will be checked following transmission in NSC by the Registrar’s Office and NSLDS by the Financial Aid Office to ensure that enrollment status is accurate. Name of Contact Person: Julie Cowen, Dean of Academic Records, 714-662-5204 Projected Completion Date: Program review for standard/non-standard classification for 2024-25 was completed on October 28, 2024 and will be completed annually in March-April beginning in 2025.

Finding 2022-001: Special Tests: Return of Title IV Funds - Significant Deficiency in Internal Control Over Compliance - See Schedule of Findings and Questioned Costs for table. Criteria ? An institution must return the total amount of unearned Title IV assistance. The unearned amount of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by the student, from the amount of Title IV aid that was disbursed to the student as of the date of the institution's determination that the student withdrew (34 CFR 668.22). An institution must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the: (1) payment period or period of enrollment, (2) academic year in which the student withdrew, or (3) educational program from which the student withdrew (34 CFR section 668.22(j)). Returns of Title IV funds are required to be deposited or transferred into the student financial aid account or electronic funds transfers initiated to U.S. Department of Education as soon as possible, but no later than 45 days after the date the institution determines that the student withdrew (34 CFR section 668.173(b)). Condition/context ? From a population of approximately 84 students who were recipients of Title IV funding and had either unofficially or officially withdrawn during the fiscal year ended June 30, 2022, we selected 11 students for testing by comparing student records to the calculation of the return of Title IV funds, if any, and to the federal government?s Common Origination and Disbursement system. From our testing, we noted one instance where the return to Title IV calculation was completed accurately but funds, totaling $1,118, were not returned within 45 days after the date of the University?s determination that the student withdrew. Effect ? The University did not return certain Title IV funds timely to the U.S. Department of Education. Cause ? The finding occurred due to lack of adherence to the University?s policies and procedures over return of Title IV funds and inconsistencies in performance of processing due to employee turnover in both the Registrar?s office and the Financial Aid office. Repeat finding ? This is not a repeat finding. Questioned costs ? None. Recommendation ? We recommend that the University revise and strengthen its policies and procedures over return of Title IV funds to ensure the process is fully completed are returned within 45 days of determining the student?s withdrawal date. Views of responsible officials and planned corrective actions ? The University concurs with this finding. Management has implemented continual training and education of current policies and procedures and is developing additional procedures to ensure the return to Title IV process is fully completed included verifying that funds due to the U.S. Department of Education are returned timely.

Management's Corrective Action Plan - Finding 2022-001: Special Tests: Return of Title IV Funds - In our 2021-22 audit it was identified that a Return of Title IV funding (R2T4) occurred outside of the required 45 day window. During the 2021-22 year the Financial Aid Office was continually working on finding the most accurate ways to ensure that all withdrawals were identified and reviewed for R2T4 processing within the necessary time frames. We were using multiple reports that were created and delivered from various departments to screen all enrollment status changes, however, these reports were not capturing all necessary information which caused us to not identify the student in question until we were outside of the 45 day window to return funds. We have since worked to create a new report that captures all enrollment changes for the semester within one report. The new report is now delivered on a weekly basis for review to ensure that all required R2T4 deadlines are met. - Contact Person: Chris, Preszler, Director of Financial Aid - Anticipated Completion Date: November 30, 2022.

Finding 2021-002: Special Tests: Enrollment Reporting ? Significant Deficiency in Internal Control Over Compliance Criteria: The National Student Loan Data System (NSLDS) is the U.S. Department of Education?s (ED) centralized database for students? enrollment information. It is the University?s responsibility to update this information timely and accurately when the enrollment status of a student that has received federal aid changes and/or a student has changed their permanent address. The University is ultimately responsible for the timeliness and accuracy of this information even when a third-party servicer is used as an intermediary to report on the University?s behalf. The University currently contracts with a third-party servicer and has elected to receive an Enrollment Reporting roster file every 30 days from NSLDS. At a minimum, institutions must certify the enrollment status and permanent address of all students included on the roster file within 15 days of receiving the roster file. If errors are identified, the University has 10 days to resubmit a corrected response. Unless the school expects to complete its next roster within 60 days, the school must notify the lender or the guaranty agency within 30 days, if it discovers that a student who received federal aid either did not enroll or ceased to be enrolled on at least a half-time basis or has changed their permanent address (34 CFR section 685.309). Condition/Context: Using a non-statistical sample, we selected 37 students identified by the University as having received some federal assistance and who either withdrew from the University or graduated from the University during the year ended June 30, 2021. Our sample consisted of 28 students who were identified as graduated and 9 students who were either identified as withdrawn or whose full-time status was modified. These selections were made out of a population of approximately 454 students. We then compared the enrollment information and withdrawal or graduation date per the University?s records to the information reported to NSLDS. We believe this to be a representative sample of the population. We noted exceptions with 10 of the 28 students identified as graduates; whereby, each of the students were reported as withdrawn to NSLDS with intent to update to a graduated status upon conferral; however, the students remained reported as withdrawn and the status was not corrected timely. We also noted 3 of the 9 students whose enrollment status change was not communicated within the required time frame based on when the status change occurred. We noted exceptions with 8 of the 23 students identified as having had a permanent address change during the fiscal year. Of these exceptions, 5 were reported outside of the 60 day window and 3 changes were not reported until identified during the audit. Effect ? Enrollment status is utilized by students, ED, the Direct Loan program, lenders, and other institutions to determine in-school status. NSLDS also uses the newly submitted enrollment data to recalculate a student?s 150% limit for direct subsidized loans to determine if loss or protection of the subsidy should occur. Therefore, this significant deficiency in enrollment reporting could result in incorrect future eligibility for undergraduate aid, as well as impact future subsidy loss or protection related to the 150% limit. Addresses are used by ED to make communications with students regarding the status of their loans; therefore, discrepancies in reporting could result in late communications or notices for repayment to those students. Cause ? These exceptions occurred partially due to staff turnover that took place during the year in which past procedures and policies were not followed as well a misunderstanding that when students who are withdrawn no longer remain on the roster file after 60 days; therefore, further changes in status to graduated are not received by NSLDS without manual entry or other forms of submission. Repeat finding ? A portion of this findings is a repeat of finding 2020-001. Questioned costs ? None. Recommendation ? We recommend that the University develop additional procedures to monitor the accuracy of information provided by its third-party servicer on behalf of the University to NSLDS. One additional monitoring control could be to review a sample of students within NSLDS after each roster file response to ensure that the enrollment status is accurate. Each institution has access to correct information directly within NSLDS at any time. We also recommend that management add additional methods to track address changes made known by students so that reporting to ED can be done within the required time frame. Views of responsible officials and planned corrective actions ? The University concurs with this finding. Although the enrollment data was submitted to the Clearinghouse within the regulated timeline, there was no follow up with NSLDS to ensure that the change in enrollment was properly submitted to NSLDS. The Dean of Academic Records and Registrar will review and ensure all data submitted to NSLDS is updated and complete, in compliance with reporting timelines. In response to the address change issue, the University was unaware that address changes being made in their system were not consistently being transmitted through Clearinghouse to NSLDS. The University will be working with Clearinghouse to clarify the process and ensure that any updated data in the system is included in all transmissions to NSLDS.

Finding 2021-002: Special Tests: Enrollment Reporting - Significant Deficiency in Internal Control over Compliance - Views of responsible officials: The University concurs with this finding. Although the enrollment data was submitted to the Clearinghouse within the regulated timeline, there was no follow up with NSLDS to ensure that the change in enrollment was properly submitted to NSLDS. The Dean of Academic Records and Registrar will review and ensure all data submitted to the NSLDS is updated and complete, in compliance with reporting timelines. In response to the address change issue, we were unaware that address changes being made in our system were not consistently being transmitted through Clearinghouse to NSLDS. We are currently working with Clearinghouse to clarify the process and ensure that any updated data in the system is included in all transmissions to NSLDS. Contact person: Julie Cowen. Anticipated Completion Date: June 30, 2022.

2020-001

Finding 2020-001: Special Tests: Enrollment Reporting ? Significant Deficiency in Internal Control Over Compliance (See Section III - Federal Award Findings and Questioned Costs for table/chart) Criteria: The National Student Loan Data System (NSLDS) is the Department of Education?s (ED) centralized database for students? enrollment information. It is the University?s responsibility to update this information timely and accurately when the enrollment status of a student that has received federal aid changes. The University is ultimately responsible for the timeliness and accuracy of this information even when a third-party servicer is used as an intermediary to report on the University?s behalf. The University currently contracts with a third-party servicer and has elected to receive an Enrollment Reporting roster file every 30 days from NSLDS. At a minimum, institutions must certify the enrollment status of all students included on the roster file within 15 days of receiving the roster file. If errors are identified, the University has 10 days to resubmit a corrected response. Unless the school expects to complete its next roster within 60 days, the school must notify the lender or the guaranty agency within 30 days, if it discovers that a student who received federal aid either did not enroll or ceased to be enrolled on at least a half-time basis (34 CFR section 685.309). Condition/Context: Using a non-statistical sample, we selected 17 students identified by the University as having received some Federal assistance and who either withdrew from the University or graduated from the University during the year ended June 30, 2020. Our sample consisted of 5 students who were identified as graduated and 12 students who were either identified as withdrawn or whose full-time status was modified. These selections were made out of a population of approximately 150 students. We then compared the enrollment information and withdrawal or graduation date per the University?s records to the information reported to NSLDS. We believe this to be a representative sample of the population. We noted exceptions with 4 of the 5 students identified as graduates; whereby, each of the students were reported as withdrawn to NSLDS with intent to update to a graduated status upon conferral; however, the students remained reported as withdrawn and the status was not corrected timely. We also noted 8 of the 17 students whose enrollment status change was not communicated within the required time frame based on when the status change occurred. Effect ? Enrollment status is utilized by students, ED, the Direct Loan program, lenders, and other institutions to determine in-school status. NSLDS also uses the newly submitted enrollment data to recalculate a student?s 150% limit for direct subsidized loans to determine if loss or protection of the subsidy should occur. Therefore, this significant deficiency in enrollment reporting could result in incorrect future eligibility for undergraduate aid, as well as impact future subsidy loss or protection related to the 150% limit. Cause ? These exceptions occurred partially due to staff turnover that took place during the year in which past procedures and policies were not followed as well a misunderstanding that when students who are withdrawn no longer remain on the roster file after 60 days; therefore, further changes in status to graduated are not received by NSLDS without manual entry or other forms of submission. Repeat finding ? This is not a repeat finding. Questioned costs ? None. Recommendation ? We recommend that the University develop additional procedures to monitor the accuracy of information provided by its third-party servicer on behalf of the University to NSLDS. One additional monitoring control could be to review a sample of students within NSLDS after each roster file response to ensure that the enrollment status is accurate. Each institution has access to correct information directly within NSLDS at any time. Views of responsible officials and planned corrective actions ? The University concurs with this finding. Although the enrollment data was submitted to the Clearinghouse within the regulated timeline, there was no follow up with NSLDS to ensure that the change in enrollment was properly submitted to NSLDS. The Dean of Academic Records and Registrar will review and ensure all data submitted to NSLDS is updated and complete, in compliance with reporting timelines.

Corrective Action Plan - Audit Finding 2020-001 - Special Tests and Provisions - Enrollment Reporting: Significant Deficiency in Internal Control - Corrective Action Plan: The University concurs with this finding. Although the enrollment data was submitted to the Clearinghouse within the regulated timeline, there was no follow up with NSLDS to ensure that the change in enrollment was properly submitted to NSLDS. The Dean of Academic Records and Registrar will review and ensure all data submitted to NSLDS is updated and complete, in compliance with reporting timelines. Contact Person Responsible for Corrective Action: Julie Aggreh - Dean of Academic Records and Registrar - Anticipated Completion Date: April 2021

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2016-001

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