Clarendon College

Criteria: In accordance with 2 CFR section 200.510(b) (Uniform Guidance), “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502.”

Condition: The College did not have controls in place to ensure the Schedule of Expenditures of Federal Awards (SEFA) was accurately reconciled with the general ledger. As a result, there were discrepancies between the amounts reported on the SEFA and the actual expenditures in the College’s accounting records.

Cause: The College does not have a process in place to reconcile the SEFA to the general ledger to ensure accurate records. Expense entries (expenditures) are posted by several people across the campus when funds are spent. Revenue entries (drawdowns) are posted by the business office, however there is no process to ensure these drawdowns are the same as the amounts expended. Revenue is also not deferred to the appropriate period when necessary as part of a SEFA reconciliation process.

Effect: Without proper reconciliation procedures, there is an increased risk that the SEFA may be materially misstated. The current year SEFA contained net adjustments of $209,443 made by the auditors to reconcile to the general ledger and award letters.

Repeat Finding from Prior Year: Yes

Recommendation: We recommend management establish an informal procedure to reconcile grant funds received with funds expended on a regular basis. We also recommend management implement a formal procedure to reconcile the SEFA with the general ledger at year end.

Views of Responsible Officials: The Comptroller will reconcile this report on a monthly basis making sure that all grants and other Federal / State expenditures are on the SEFA and that the two numbers reconcile with the general ledger. This will be kept in a notebook and the calendar kept in the Comptroller’s desk. The Comptroller will also create a folder in the business office folder on the server and input the current SEFA in this folder and show any discrepancies on a monthly basis and every time this report is run for drawdowns. This process will start immediately.

The Comptroller will also make sure at year end that all items are on this report and they have been reconciled with the general ledger. This process will also be in the notebook and calendar within the desk of the Comptroller

Criteria: In accordance with 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 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 half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended."

Condition: We reviewed a sample of 40 students who received financial aid during the fiscal year. Of the 40 students tested, two students withdrew and were not accurately reported to the NSLDS within the required 60-day period. One student was never reported as withdrawn, and the other was reported after the 60-day requirement.

Population and Sample Size:

Number Dollars Questioned Cost

Population 572 $ N/A $ N/A Sample 40 N/A N/A Not in compliance 2 N/A N/A

Effect: A student's enrollment status determines eligibility for in-school status, deferment, and grace periods, as well as for the payment of interest subsidies, all of which are negatively impacted by inaccurate and late reporting.

Cause: The student who was never reported as withdrawn was enrolled less than half-time in an 8-week course rather than a full semester course. When the student dropped the class, the withdrawal was not picked up by the system. The College has since discontinued these 8-week course offerings. The student who was withdrawn was not reported due to a technical error in the reporting system.

Recommendation: We recommend that at each NSLDS upload date, management review the NSLDS enrollment reporting upload to ensure student withdrawals during the period are appropriately reported in a timely manner.

Views of the responsible official and planned corrective actions:

The Clarendon College Registrar’s Office will establish a review process to ensure that all classes in which a student fully withdrawing from the institution were enrolled are dropped promptly and that the student's enrollment status matches the status reported to NSLDS.

Criteria: In accordance with TX0790-B17 USDA Grant agreement Section 5.7 “(a) No later than January 31st of the following year in which all or any portion of the Grant is first advanced and continuing in subsequent years until completion of the Project, the Grantee must submit the following information to RUS, as directed by the agency… (iv) a completed SF 425- Federal Financial Report.”

Condition: We reviewed a sample of two reporting periods for funds spent in the fiscal year. Out of the two periods, the 2023 mandatory report was filed later than the required January 31st deadline.

Population and Sample Size:

Number Dollars Questioned Cost

Population 2 $ N/A $ N/A Sample 2 N/A N/A Not in compliance 1 N/A N/A

Effect: Untimely reporting can result in the termination of the grant, as stated in the “Termination of the Grant” section of the grant agreement.

Cause: Management did not identify the appropriate reporting requirements from the grant letter to file a report every subsequent year that funds were spent until completion of the Project.

Recommendation: We recommend that the College institute establish a process when obtaining a new grant to identify and track reporting requirements to ensure reports are submitted in a timely manner.

Views of the responsible official and planned corrective actions:

The comptroller will read through the new grant to determine reporting requirements and place these requirements in a notebook and on a calendar located on the comptroller’s desk. The calendar will be reviewed monthly to determine what is due in each grant. This item will also show up as a task on the Outlook calendar.

Criteria: In accordance with CFR section 685.200(a)(2)(i), "A Direct Subsidized Loan borrower must demonstrate financial need in accordance with title IV, part F of the Act". 20 U.S. Code 1087kk, "Except as otherwise provided therein, the amount of need of any student for financial assistance under this subchapter (except subparts [1] 1 or 2 of part A of this subchapter) is equal to: the cost of attendance of such student, minus the expected family contribution for such student, minus estimated financial assistance not received under this subchapter (as defined in section 1087vv(j) of this title)."

Condition: We reviewed a sample of 40 students who received financial aid during the fiscal year. Out of the 40 students tested, 1 student was awarded aid in excess of the calculated financial need for the semester.

Effect: The student being granted federal aid in an amount higher than the calculated need can result in unintended financial burden on the student, resulting in increased debt obligations upon graduation. On a systematic level, this condition may result in the College over-rewarding students who do not have a need for aid.

Cause: The process for calculating financial need is the responsibility of the College. The Financial Aid Office is responsible for determining student financial need and making adjustments to federal loan amounts when scholarships and grants are received by the students, as well as if the enrollment status changes between full time and part time. This student dropped from full time to part time during the semester, and the adjustment to the subsidized loan amount was not made or transferred to the unsubsidized loan.

Recommendation: We recommend the College evaluate and enhance the college's financial aid awarding procedures to prevent future instances of over-awarding. We recommend the College establish a system for ongoing monitoring of financial aid awards to identify and address discrepancies in a timely manner. Regularly review and update policies and procedures to adapt to changes in regulations and best practices.

Views of responsible official and planned corrective actions: Management agrees with the finding as noted above and the financial aid office will review and update policies and procedures in the Clarendon College Financial Aid Handbook to establish system for ongoing monitoring of financial aid awards in order to identity and address discrepancies and potential overawards in a timely manner. The system will include monitoring Cost Of Attendance, enrollment status, and unmet need. The policy/procedure will be reviewed and submitted for adoption by the CC Board of Regents for the Clarendon College Financial Aid Handbook by February 2024.