Southwestern Adventist University

Information on the Federal Program: Student Financial Assistance Cluster; PELL (ALN 84.063) and Direct Loans (ALN 84.268); United States Department of Education; Award Year 2024-25; Compliance requirement – Special Tests and Provisions; Type of Finding: Noncompliance.

Criteria: The PELL and Direct Loan programs (Pell, 34 CFR section 690.83(b)(2) and Direct Loan, 34 CFR section 685.309) require institutions to submit enrollment data and enrollment changes to the National Student Loan Data System (NSLDS).

Condition: SWAU submitted some of the required reporting to NSLDS late for the 2024-25 year. This is a continuation of finding 2024-001.

Context: Nine reports were due for 2024-25, based on the NSLDS information reviewed during the audit. Five of these reports were filed late, with the delinquencies ranging from 80 to 155 days past the due date.

Cause: A change in personnel and lack of timely hiring, understaffing and proper training in the Registrar’s office and a new university student information system led to the reports not being generated and filed timely.

Effect or Potential Effect: Student enrollment status is not correctly reflected in the NSLDS system, potentially allowing students to not begin loan repayment in the correct timeframe.

Recommendation: Deadlines and responsibilities for duties and tasks should be clearly communicated, and training regarding reporting requirements and information system considerations should be provided if needed, to avoid recurrence.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the Federal Program: PELL (ALN 84.063), and Direct Loans (ALN 84.268); United States Department of Education; Award Year 2024-25; Compliance requirement – Special Tests and Provisions; Type of Finding: Noncompliance.

Criteria:

1) 34 CFR 668.21 requires that if a student does not begin attendance in a period of enrollment, the institution must return those funds as soon as possible, but no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance.

2) 34 CFR 668.61 requires that, if an institution discovers that an applicant received more financial aid than eligible for, the program must be reimbursed by the earlier of the last day of the award year or sixty days after the applicant’s last day of attendance.

3) 34 CFR 668.22(j) requires that an institution return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew.

4) United States Department of Education FSA 2024-2025 Handbook and 34 CFR 685.202(c)(4)(i) require that schools should not return Direct Loan funds on a borrower’s behalf if more than 120 days have passed since the disbursement date.

Condition: Funds were not returned to the respective programs in the required timeframe. This is a continuation of finding 2024-002.

Context:

Findings were noted in the following categories, out of a total PELL and Direct Loan refund population of 57 totaling $114,401:

1) Three awards for students not enrolled, ranging from 13 to 70 days past the 30-day deadline, $4,141 total.

2) One award for an ineligible student, 36 days past the last day of award year deadline, $489.

3) One borrower-requested refund, 72 days past the120-day deadline, $1,732.

Cause: Inadequate training in the Ellucian software system to timely identify students not enrolled, withdrawn, and over-awarded aid.

Effect or Potential Effect: The University could retain use of federal funds longer than the permissible timeframe. Students could receive SFA benefits in error.

Recommendation: Provide training to financial aid personnel on the federal return requirements and on the software system capabilities that identify student status and eligibility amounts.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the Federal Program: PELL (ALN 84.063); United States Department of Education; Award Year 2024-25; Compliance requirement – Eligibility; Type of Finding: Questioned Costs.

Criteria: The FAFSA Simplification Act requires that PELL awards be reduced in direct proportion to the degree to which the student is not enrolled full-time.

Condition: For one student record tested, the student was over-awarded $3,698 in PELL grant funds, due to not applying the correct enrollment intensity of 50%. Student was awarded based on Maximum PELL award with no adjustment for less than full-time enrollment.

Context: Total federal student aid awards tested: 49, totaling $795,831. Projected out to total aid population of $6,207,420, the likely questioned costs would be $28,844.

Cause: Inadequate training in the Ellucian software system to verify the accuracy of student awards and identify over-awards.

Effect or Possible Effect: Student was awarded more in aid than allowed.

Questioned costs: Known questioned costs totaled $3,698.

Recommendation: Return the over-awarded amount to U.S.Department of Education if required. Provide training to financial aid personnel on the federal return requirements and on the software system capabilities that identify student eligibility amounts.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the Federal Program: Student Financial Assistance Cluster; PELL (ALN 84.063) and Direct Loans (ALN 84.268); United States Department of Education; Award Year 2023-24; Compliance requirement – Special Tests and Provisions; Type of Finding: Noncompliance.

Criteria: The PELL and Direct Loan programs (Pell, 34 CFR section 690.83(b)(2) and Direct Loan, 34 CFR section 685.309) require institutions to submit enrollment data and enrollment changes to the National Student Loan Data System (NSLDS).

Condition: SWAU submitted none of the required reporting to NSLDS for the 2023-24 year.

Context: Twelve reports were due for 2023-24, based on the NSLDS information reviewed during the audit. These delinquencies ranged from 180 to 459 days past due as of November 26, 2024.

Cause: A change in personnel and lack of timely hiring, understaffing and proper training in the Registrar’s office and a new university student information system led to the reports not being generated and filed as required.

Effect or Potential Effect: Student enrollment status is not correctly reflected in the NSLDS system, potentially allowing students to not begin loan repayment in the correct timeframe.

Recommendation: The delinquent NSLDS reports for the 2023-24 academic year were subsequently prepared and submitted as of February 11, 2025. Staffing has been added. Deadlines and clear responsibilities for duties and tasks should be communicated and training provided if needed, to avoid recurrence.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the Federal Program: Student Financial Assistance Cluster; SEOG (ALN 84.007),PELL (ALN 84.063), and Direct Loans (ALN 84.268); United States Department of Education; Award Year 2023-24; Compliance requirement – Special Tests and Provisions; Type of Finding: Noncompliance.

Criteria:

1) 34 CFR 668.21 requires that if a student does not begin attendance in a period of enrollment, the institution must return those funds as soon as possible, but no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance.

2) 34 CFR 668.61 requires that, if an institution discovers that an applicant received more financial aid than eligible for, the program must be reimbursed by the earlier of the last day of the award year or sixty days after the applicant’s last day of attendance.

3) 34 CFR 668.22(j) requires that an institution return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew.

Condition: Funds were not returned to the respective programs in the required timeframe.

Context:

1) Awards for students not enrolled: 9 out of a population of 12, ranging from 6 to 11 days past the 30-day deadline, amounting to $12,953.

2) Awards for students who withdrew: 5 out of a population of 7; ranging from 58 to 315 days past the 45-day deadline, amounting to $14,067.

3) Over-awards: 12 out of a population of 20; ranging from 46 to 222 days past the year-end/60-day deadline, amounting to $26,680.

Cause: Inadequate training in the Ellucian software system to timely identify students not enrolled, withdrawn, and over-awarded aid.

Effect or Potential Effect: The University could retain use of federal funds longer than the permissible timeframe. Students could receive SFA benefits in error.

Recommendation: Provide training to financial aid personnel on the federal return requirements and on the software system capabilities that identify student status and eligibility amounts.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the Federal Program: Student Financial Assistance Cluster; SEOG (ALN 84.007),PELL (ALN 84.063), and Direct Loans (ALN 84.268); United States Department of Education; Award Year 2023-24; Compliance requirement – Special Tests and Provisions; Type of Finding: Material Weakness in Internal Control over Compliance.

Criteria: Institutions should have proper internal controls in place to ensure compliance with the NSLDS reporting requirements of 34 CFR section 690.83(b)(2) and 34 CFR section 685.309 and with the timely return of Title IV funds under 34 CFR 668.21, 34 CFR 668.61, and 34 CFR 668.22(j).

Condition: Lack of appropriate internal controls over compliance allowed for the findings noted in 2024-001 and 2024-002 above.

Context: These errors affected twelve NSLDS reports and all students that withdrew or graduated during the year, as well as twenty-six students that either didn’t enroll, withdrew, or were over-awarded aid.

Cause: Inadequate oversight to ensure compliance with these SFA requirements, due to inadequate staffing and continued difficulties with the Ellucian software system.

Effect or Possible Effect: Students could be allowed to not begin loan repayment when required. University could retain funds improperly. Other errors could occur.

Recommendation: Follow recommendations noted above in 2024-001 and 2024-002.

Responsible Official’s Response and Corrective Action Planned: See corrective action plan.

Information on the federal program: Higher Education Institutional Aid - Hispanic-Serving Institutions – Science, Technology, Engineering, or Mathematics and Articulations Programs (Assistance Listing number 84.031C) and Hispanic-Serving Institutions – DHSI Program (Assistance Listing number 84.031S); United States Department of Education; Award Year 2022-23; Compliance Requirement – Allowable Costs; Type of Finding – Questioned Cost.

Criteria: 2 CFR Part 200 requires that compensation charged to a program must be adequately supported by documentation of the employee’s time.

Condition: For one employee, for all three paychecks included in the sample tested, 100% of salary was charged to the grant, but only 35% was supported by the time & effort records and program budget. For one paycheck tested for another employee, 100% was charged to the grant, but the supporting documentation indicated that this employee did not work on the grant program.

Cause: University management did not have controls in place to ensure that the correct salary amounts were charged to the grant.

Effect: Incorrect amounts could be charged to the grant.

Questioned Costs: Known questioned costs totaled $4,352, with likely questioned costs exceeding $25,000.

Context: Total payroll charged to this program for the year was $608,941.

Recommendations: Management should add a procedure to review payroll charges made to grants each pay period as compared to the time & effort documentation.

Responsible Official’s Response and Corrective Action Planned: see corrective action plan.

Information on the federal program: Higher Education Institutional Aid - Hispanic-Serving Institutions – Science, Technology, Engineering, or Mathematics and Articulations Programs (Assistance Listing number 84.031C); United States Department of Education; Award Year 2022-23; Compliance Requirement – Procurement and Suspension & Debarment; Type of Finding – Material Noncompliance.

Criteria: 2 CFR Part 180 requires that grantees establish procedures that prohibit the entity from contracting with or making subawards to parties that are suspended or debarred by the federal government.

Condition: SWAU’s internal control policies and procedures do not address the prohibition of doing business with suspended or debarred parties.

Cause: Although SWAU was notified of this requirement in two previous audit years, audit follow-up procedures were not put in place due to management personnel changes.

Effect: Goods or services for the grant could have been provided by a debarred or suspended party, in violation of federal regulations.

Questioned Costs: n/a for this finding.

Context: Current year goods and services totaled $542,779 for this grant. For the nine goods and services disbursements we tested, totaling $492,896, we searched the federal list of debarred/suspended parties and did not find any of them listed.

Recommendations: Management should immediately implement a written procedure that prohibits doing business with debarred or suspended parties and includes steps to ensure compliance with that prohibition.

Responsible Official’s Response and Corrective Action Planned: see corrective action plan.

Information on the federal program: Student Financial Assistance Cluster; United States Department of Education; Award Year 2022-23: Compliance Requirement – Special Tests and Provisions; Type of Finding: Material Noncompliance.

Criteria: 16 CFR 314 requires that higher education institutions develop, implement, and maintain a comprehensive written information security program (WISP) in compliance with the Gramm-Leach-Bliley Act (GLBA).

Condition: The University has not established a WISP.

Cause: The University’s IT personnel were not made aware of this compliance requirement.

Effect: Confidential student financial and other information could be exposed to the risk of outside parties gaining access.

Questioned Costs: n/a for this finding.

Context: All confidential student financial and other information could be affected if the information security procedures are not adequate.

Recommendations: Formulate a WISP and follow its procedures as soon as possible.

Responsible Official’s Response and Corrective Action Planned: see corrective action plan.

Information on the federal program: Higher Education Institutional Aid - Hispanic-Serving Institutions – Science, Technology, Engineering, or Mathematics and Articulations Programs (Assistance Listing number 84.031C) and Hispanic-Serving Institutions - (DHSI) Program (Assistance Listing number 84.031S); United States Department of Education; Award Year 2022-23; Internal Control Deficiency; Type of Finding: Material Weakness in Internal Control over Compliance. Criteria: Institutions should follow established procedures to ensure compliance with 2 CFR Part 200 requirements for adequate documentation to support grant expenses.

Condition: Lack of appropriate management review allowed for the following issues in the grant disbursements we tested:

1) Time & effort certifications: a. One was not completed until after we requested it in the course of the audit. b. One showed 50% should be charged to the grant, but only 35% was charged to the grant. c. Two did not list the month on the form. d. Three showed 80% grant and 20% institutional, but the hours listed showed equal hours for grant and institutional. e. One was not signed by the supervisor. f. As noted in 2023-002 above, one showed 35% should be charged to the grant, but 100% was charged to the grant.

2) Five purchases totaling $472,879 did not follow approval procedures outlined in the internal control policy, which required prior Board of Trustee approval for purchases over $17,500.

3) Two purchases totaling $91,975 did not reflect bid approval as outlined in the internal control policy.

Cause: The University implemented a comprehensive system software change during the current year. The additional time required for this effort, coupled with management personnel changes and staff shortages, led to the lack of appropriate approval and review of documentation.

Effect: Incorrect amounts and/or improper payments could be charged to the grant.

Questioned Costs: n/a for this finding.

Context: Our testing included 25 payroll items and 10 payments for goods and services.

Recommendations: Management should add procedures to (1) review payroll charges made to grants each pay period as compared to the time & effort documentation and (2) document approval for purchases and bids, in accordance with policy. If the intent is not for the Board of Trustees to provide approval, policies should be revised to reflect which committee/individuals will provide that approval.

Responsible Official’s Response and Corrective Action Planned: see corrective action plan.