California Institute of the ArtsHigher Education

FINDING 2020-001 ? Special Tests and Provisions ? Enrollment Reporting ? Significant Deficiency in Internal Controls Criteria: The National Student Loan Data System (?NSLDS?) is the Department of Education?s (?ED?s?) centralized database for students? enrollment information. In accordance with the NSLDS Enrollment Reporting Guidelines (the ?Guide?), published by ED, the timeliness of reporting is important to ensure that students receive their entitled deferment benefits and it provides Congress with necessary enrollment and graduation rates of grant and loan recipients. It is the Institute?s responsibility to update this information. The Guide also emphasizes that even if an Institute uses an enrollment reporting servicer, the Institute still has the primary responsibility for submitting timely, accurate, and complete responses to Enrollment Reporting roster files, and for reporting any changes in student enrollment status in a timely manner. The Institute determines how often it receives the Enrollment Reporting roster file with the default set at every 2 months. Schools must complete and return within 30 days the Enrollment Reporting roster file [formerly the Student Status Confirmation Report (SSCR)] placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS (OMB No. 1845-0035). Unless the Institute expects to complete its next roster within 60 days, the Institute must notify the lender or the guaranty agency within 30 days, if it discovers that a student who received a loan either did not enroll or ceased to be enrolled on at least a half-time basis (Direct Loan, 34 CFR section 685.309). Condition/Context: In testing individual student status changes, we selected a random sample of 22 students out of a population of 184 who had received student financial assistance and had withdrawn or graduated from the Institute during the 2019-2020 fiscal year as identified by internal records. We compared the enrollment information and withdrawal or graduation date per the Institute?s records to the information reported to NSLDS. We noted one selection was reported outside of required time frames. The student graduated on June 16, 2020, and the status change was reported to NSLDS on October 22, 2020, within 128 days. Cause: The delays were caused by a lapse in internal controls within the enrollment services department. Effect: Status change for one student was not reported to NSLDS timely. Repeat finding: This is not a repeat finding. Recommendation: We recommend both the enrollment services and the financial aid departments closely follow their internal control procedures to ensure all status changes are reported timely. Views of responsible officials: Management agrees there was a lapse in controls surrounding the process of reporting graduated students. New and revised controls will be implemented to ensure timely processing of status changes.

See Schedule of Findings and Questioned Costs for chart/table. Criteria ? The determination of Student Financial Assistance (?SFA?) award amounts is based on cost of attendance (?COA?) and financial need. Financial need is generally defined as the student?s COA minus financial resources reasonably available. The Institute must also take into account other information that it has regarding the student?s financial status. For Title IV programs, the financial resources available is generally the Expected Family Contribution (?EFC?) that is computed by the central processor and included on the student?s Student Aid Report (?SAR?) and the Institutional Student Information Record (?ISIR?) provided to the institution. Awards must be coordinated among the various programs and with other Federal and non-Federal aid (need and non-need based aid) to ensure that total aid is not awarded in excess of the student?s financial need (34 CFR section 668.42, FWS, 34 CFR sections 673.5 and 673.6; Direct Loan, 34 CFR section 685.301). Condition/Context ? We selected a sample of 40 students who had received Federal aid during the 2018-19 fiscal year. For students who received Federal aid, we compared the amount awarded and disbursed to the student?s COA and EFC to determine if they were over-awarded for the 2018-19 award year. We noted an exception with 1 out of the 40 students tested. The student?s COA was $77,076 and the student had an EFC of $58,742, resulting in a need of $18,334. When the student?s aid was packaged, the student was awarded a Direct Subsidized Loan of $5,500 and an Unsubsidized Loan of $2,000. After packaging, the Institute became aware that the student was also awarded a scholarship for $20,200. At that time, the student?s Federal aid was not disbursed yet and should have been adjusted for the fact that the student had no more financial need after the scholarship.Cause ? This occurred due to a lack of monitoring internal controls to prevent non-compliance. As the student was awarded additional funds outside the customary packing timeline, the Institute?s internal controls did not properly prevent this error. Effect ? The student was awarded and disbursed a Federal Subsidized Loan, which they were not eligible to receive. Recommendation ? We recommend that the Institute design procedures to monitor on-going disbursements of federal aid in order to identify any over-awards after students have been initially packaged.Views of responsible officials and planned corrective actions ? The Financial Aid Office plans to run and review system-generated overaward reports on a weekly basis to ensure there are no instances of federal awards exceeding students? financial need. Any necessary adjustments will be made timely during this weekly review.

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