Arizona Christian University

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 685.309 requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status.

Condition: During our testing, we noted 1 out of 40 students in which their roster update was not submitted within 60 days. Questioned Costs: None

Context: During our testing, it was noted the University does not have a process in place to ensure timeliness of NSLDS reporting. Cause: The University did not have a process in place to ensure students were reported timely.

Effect: The University did not comply with Department of Education (ED) regulations by reporting student enrollment status changes timely and timely.

Repeat Finding: Yes - 2024-001

Recommendation: We recommend the University review its reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by regulations. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations 34 CFR 668.22, states that when students withdraw from a school, institutions are required to determine earned and unearned portions of Title IV aid as of the date the student ceased attendance based on the amount of time the student spent in attendance. Up through the 60% point in each payment period or period of enrollment, a pro rate schedule is used to determine the amount of Title IV funds the students earned at the time of withdrawal. After the 60% point in the payment period or period of enrollment, a student has earned 100% of the Title IV funds the student was scheduled to receive during the period. Condition: During our testing we noted that following errors in R2T4 reporting: • 1 out of 22 students tested had the wrong withdrawal date used in calculating their R2T4. This resulted in the student having three extra completed days of the term in their R2T4 calculation leading to ACU not returning enough PELL back to the Department of Education in the amount of $38.12. • 1 out of 22 students tested did not have enough days included for their scheduled break in their R2T4 calculation. ACU had this students withdrawal date be in the middle of spring break instead of the last date of attendance. This resulted in ACU returning too much Subsidized loan funds back to the Department of Education in the amount of $69.17. Questioned Costs: $31.05

Context: The University did not properly calculate R2T4's in all cases where it should have.

Cause: The University did not have proper procedures in place to correctly calculate and timely return appropriate funds.

Effect: Funds were not disbursed to students or returned to the Department of Education as they should have been.

Repeat Finding: Yes - 2024-002 Recommendation: We recommend the University implement a formal review process as it relates to withdrawn students to ensure R2T4 calculations are being performed accurately and timely. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 685.203 specifies the annual and aggregate loan limits the Institutions may not exceed for an academic year of study under the Direct Loan program and also requires loans to be prorated for a program of student that is less than a full academic year in length. This regulation also requires institutions to ensure students are awarded up to their full need and eligibility of subsidized loans. Condition: During our testing, we noted 1 out of 40 students that was not awarded their full eligible amount of subsidized loans. Questioned Costs: $1,000 Context: The University under awarded a student and did not correctly package this student’s financial aid for the 24-25 award year. Cause: The University did not have proper procedures in place to ensure all students were properly awarded up to their annual limit in subsidized loans based on their grade level. Effect: The Institution is not awarding subsidized Stafford loans for which the student is eligible. Repeat Finding: No Recommendation: We recommend the University review their awarding procedures and implement procedures to ensure the subsidized direct loans loans are awarded within the annual and aggregate limits. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2023 through June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 685.309 requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Regulations require the status include an accurate effective date. In addition, regulations require that an institution make necessary corrections and return the records within 10 days for any roster files that don’t pass the NSLDS enrollment reporting edits. Condition: During our testing, we noted the following items: • Two students in which their roster update was not submitted within 60 days; • Six students’ enrollment effective date per the institution's records did not match the enrollment effective date per NSLDS; • One student's program enrollment effective date per the institution's records did not match the -enrollment effective date per NSLDS; • Three students were reported as full time even though they had officially withdrawn from the University; and • One student did not have their status certified as required every 60 days Questioned Costs: None Context: During our testing, it was noted the University does not have a process in place to ensure timeliness and accuracy of NSLDS reporting. Cause: The University did not have a process in place to ensure the student who graduated or withdrew were reported timely and accurately. Effect: The University did not comply with Department of Education (ED) regulations by reporting student enrollment status changes timely and timely. Repeat Finding: Yes - 2023-003 Recommendation: We recommend the University review its reporting procedures to ensure that students’ statuses are accurately and timely reported to NSLDS as required by regulations. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2023 through June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations 34 CFR 668.22, states that when students withdraw from a school, institutions is required to determine earned and unearned portions of Title IV aid as of the date the student ceased attendance based on the amount of time the student spent in attendance. Up through the 60% point in each payment period or period of enrollment, a pro rate schedule is used to determine the amount of Title IV funds the students earned at the time of withdrawal. After the 60% point in the payment period or period of enrollment, a student has earned 100% of the Title IV funds the student was scheduled to receive during the period. Condition: During our testing, for one out of 26 students, an R2T4 calculation was not performed even though they attended classes. All of their aid was returned; however, the student did earn a portion that was improperly returned to ED. Questioned Costs: $527.25 Context: The University did not properly calculate R2T4's or timely return funds in all cases where it should have. Cause: The University did not have proper procedures in place to correctly calculate and timely return appropriate funds. Effect: Funds were not disbursed to students as they should have been. Repeat Finding: No Recommendation: We recommend that the University implement a formal review process as it relates to withdrawn students to ensure R2T4 calculations are being performed accurately and timely. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2024 through June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 668.164(h) states a title IV, HEA credit balance occurs whenever the amount of title IV, HEA program funds credited to a student's ledger account for a payment period exceeds the amount assessed the student for allowable charges associated with that payment period. A title IV, HEA credit balance must be paid directly to the student or parent as soon as possible, but – (1) No later than 14 days after the balance occurred if the credit balance occurred after the first day of class of a payment period; or (2) No later than 14 days after the first day of class of a payment period if the credit balance occurred on or before the first day of class of that payment period. Condition: During our testing of credit balances resulting from federal funds, we noted three out of 40 tested where the credit balance was not refunded within the 14-day period. Questioned Costs: None Context: The students had credit balances after aid adjustments that were not refunded timely. Cause: The University did not have proper procedures in place to ensure all credit balances are refunded within the 14-day period. Effect: The University did not refund students within 14 days for credit balances that arose from federal funds as required by ED regulations. Repeat Finding: No Recommendation: We recommend the University review their current policies and procedures around credit balances and ensure the processes in place are sufficient to ensure student credit balances due to federal funds are refunded within 14 days. Views of Responsible Officials: There is no disagreement with the audit finding.

2023-002 Common Origination and Disbursement (COD) Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters

Criteria or Specific Requirement: The Department of Education requires the University to report the disbursement dates and amounts to the Common Origination and Disbursement (COD) system within 15 days of disbursing Pell (34 CFR 690.83(b)(2) and Direct Loan (34 CFR 685.309) funds to a student.

Condition: During our testing of 40 disbursements, we noted one Pell disbursement date per COD did not align with the student account disbursement date.

Questioned costs: None

Context: During our testing, it was noted the University did not properly follow the process to ensure disbursements are accurately reported to COD.

Cause: The University did not follow the procedure to meet the requirement that disbursements made to students must be reported to COD within 15 days of the disbursement date.

Effect: Students interest accrues based on disbursement date reported to COD for Pell disbursements, thus interest calculation could be skewed due to the discrepancy in disbursement dates reported.

Repeat Finding: No

Recommendation: We recommend the University evaluate its procedures and policies around reporting disbursements to COD to ensure that student information is reported accurately and timely.

Views of Responsible Officials: There is no disagreement with the audit finding.

2023-003 National Student Loan Data System (NSLDS) Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters

Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 685.309 requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Condition: During our testing, we noted 16 out of the 40 students tested where the student was not reported in a timely manner after the school determined the students change in status.

Questioned Costs: None

Context: During our testing, it was noted the University does not have a process in place to ensure timeliness of NSLDS reporting.

Cause: The University did not have a process in place to ensure the student who graduated or withdrew were reported timely.

Effect: The University did not comply with Department of Education (ED) regulations by reporting student enrollment status changes timely.

Repeat Finding: Yes - 2022-001

Recommendation: We recommend the Institute review its reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by regulations.

Views of Responsible Officials: There is no disagreement with the audit finding

2023-004 Eligibility Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters

Criteria or Specific Requirement: Per the Code of Federal Regulations, 34 CFR 673.5, students may not be awarded need based aid in excess of their calculated need. In addition, 34 CFR 685.203(j) states that in no case may a loan amount exceed the student’s estimated cost of attendance for the period of enrollment for which the loan is intended less the student’s estimated financial assistance for that period and in the case of Direct Subsidized Loans, the borrower’s expected family contribution for that period.

Condition: During our testing, we noted for 2 out of 40 students tested, we noted an over award. For one of these students, it was an over award of need-based aid in the amount of $672 as total aid paid was greater than the student's total need in the 2022-23 academic year. For the other student, we noted an over award of $1,467 of overall aid during the 2022-23 academic year that was greater than the student’s cost of attendance.

Questioned Costs: $2,139

Context: During our testing, it was noted an erroneous computation of the student’s financial need and cost of attendance thus causing an over award in need based and overall aid.

Cause: Management incorrectly awarded these students based on their financial need and cost of attendance.

Effect: The University is not in compliance with Department of Education requirements.

Repeat Finding: Yes – 2022-002

Recommendation: We recommend the University implements policies to review all student award packages at the start of the academic year to ensure no over awards exist.

Views of Responsible Officials: There is no disagreement with the audit finding.

2023-005 Special Test: 240 Day Checks Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters

Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check.

Condition: Twenty checks totaling $12,138.00 related to student refunds of Title IV federal financial aid were outstanding more than 240 days as of June 30, 2023.

Questioned Costs: $12,138

Context: During our testing, it was noted the University does not have a process in place to ensure checks are refunded to ED after 240 days outstanding.

Cause: The University did not have a process in place to ensure all outstanding checks over 240 days was properly returned to the ED.

Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department.

Repeat Finding: No Recommendation: We recommend that the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education after 240 days.

Views of Responsible Officials: There is no disagreement with the audit finding.

2023-006 Eligibility – First Time Borrower Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: Various Award Period: July 1, 2022 through June 30, 2023 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters

Criteria or Specific Requirement: An institution may not make a disbursement of a Direct Loan to a first-year undergraduate who is a first-time borrower until 30 days after the first day of classes of the payment period (34 CFR 668.164(i)(2)(i) and 34 CFR 685.303(b)(5))

Condition: During our testing, we noted 2 out of the 40 students were first time borrowers who received a disbursement of Direct Loans within 30 days after the first day of classes. The University was required to wait until after 30 days of the first day of classes. For both cases, the student remained enrolled, so there was no need to issue a refund.

Questioned Costs: None

Context: During our testing, it was noted the University does not have a process in place to comply with the federal regulations.

Cause: The University did not have a process in place to ensure compliance with federal regulations.

Effect: The University is not in compliance with Department of Education requirements in regards to first-time borrowers receiving Direct Loans.

Repeat Finding: No Recommendation: We recommend that the University review its procedures related to first-time borrowers to ensure they are in compliance with the Department of Education's regulations.

Views of Responsible Officials: There is no disagreement with the audit finding.