SOUTHWESTERN CHRISTIAN COLLEGE

Finding 2024-001 – U.S. Department of Education (USDE), Title IV Student Financial Aid Programs (significant deficiency): Information on the Federal Program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grants Program, FAL No. 84.063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Federal regulations governing Title IV programs. Condition – Non-compliances were noted, as more fully described in the context below. Questioned Costs – $29,087 Context – We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs a) Documentation to support the College’s reconciliations of its Title IV programs between the Business Office and the Office of Financial Aid were not available. 34 CFR 685.300(b)(5). b) Four (4) out of 10 students did not have timely or accurate enrollment reporting to the National Student Loan Data System (NSLDS). 34 CFR 685.309(b). c) The College did not submit Federal Work-Study files for one (1) out of seven (7) students selected for testing. As a test of controls, we were unable to verify Federal Work-Study check endorsements against canceled checks. 34 CFR Part 675. d) Documentation to support student refund testing was not provided. 34 CFR 668.164(h)(1). e) The College did not submit verification documentation for three (3) out of 10 students selected for testing. 34 CFR 668.54 f) We were unable to fully test the Fiscal Operations Report and Application to Participate (FISAP) since the Title IV reconciliations were not provided. 34 CFR 674.19 Cause – Oversight by responsible employees. Effect – The College’s participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding – Yes Auditor’s Recommendation – The College should implement corrective actions to ensure that the above findings are resolved and will not recur in future periods. Views of Responsible Officials – Management shall prepare monthly reconciliations of the College’s Title IV programs between the Business Office and the Office of Financial Aid. In addition, copies of the Fiscal Operations Report and Application to Participate (FISAP) shall be retained and completed such that Title IV reconciliations can be fully tested. Accurate student enrollment information shall be maintained and reported to the National Student Loan Data System (NSLDS). Federal Work-Study files shall be maintained for all Work-Study students. Complete student refund documentation shall be maintained for all applicable students. Required FAFSA verification documentation shall be obtained and retained for all applicable students. Management of the College will work to implement corrective actions to ensure that the above findings will not recur in future periods.

Finding 2024-002 – U.S. Department of Education (USDE) Higher Education Emergency Relief Fund (HEERF) Programs (significant deficiency): Information on the Federal Programs – HEERF Historically Black Colleges and Universities (HBCU), 18004(a)(2), FAL No. 84.425J, June 30, 2024. Criteria – Federal regulations: CARES Act 18004(e), CRRSAA 314(e), 2 CFR 200.328, 2 CFR 200.329, 34 CFR 75.720(b). Condition – Non-compliance noted regarding untimely filing of quarterly and annual report. Questioned Costs – Noted within each finding below. Context – We noted the following in connection with our testing of compliance: a) Our review of the required quarterly and annual report submissions revealed the College failed to submit the annual performance report, and one (1) quarterly report was submitted untimely. Cause – Administrative oversight. Effect – Reporting deadlines were missed. Repeat Finding – No. Auditor’s Recommendation – The College should strengthen controls and oversight over grant reporting to assure that all reporting requirements are being met accurately and timely. Views of Responsible Officials – The HEERF department and reporting systems were closed, and Grants personnel were unable to retrieve a copy of the required reports from the ESF Data Collection System by the suggested deadline of May 19, 2025. A reporting calendar was implemented in August 2025 along with other policies and procedures outlined in the corrective action plan attached. All future reports will be submitted timely under this protocol.

Finding 2023-001 - U.S. Department of Education (USDEJ. Title IV Student Financial Aid Programs (Deficiency): Information on the federal program: Federal Direct Student Loans, Assistance Listing No. 84. 268, June 30, 2023; Federal Pell Grants Program, Assistance Listing No. 84. 063, June 30, 2023; Federal Supplemental Educational Opportunity Grant, Assistance Listing No. 84. 007, June 30, 2023; Federal Work-Study Program, Assistance Listing No. 84. 033, June 30, 2023. Criteria - Federal regulations governing Title IV programs. Condition - Non-compliances were noted, as more fully described in the context below. Questioned Costs - $9,415. Context- We observed the following condition in connection with our testing of the various USDE, Title IV, Student Financial Assistance Programs. a) One (1) out of 15 files tested were missing official transcripts. The total questioned costs $9,415. 34 CFR 668.32 Cause - Oversight by responsible employees. Effect- The College's participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding- Yes. Auditor's Recommendation - The College should implement corrective actions to ensure the above finding is resolved and will not recur in future periods.

Finding 2023-002 – U.S. Department of Education (USDE) Higher Education Emergency Relief Fund (HEERF) Programs (material weakness):

Information on the federal programs – HEERF Student Aid Portion 18004(a)(1), Assistance Listing No. 84.425E, June 30, 2023; HEERF Institutional Portion 18004(a)(1), Assistance Listing No. 84.425F, June 30, 2023; and HEERF Historically Black Colleges and Universities (HBCU) 18004(a)(2), Assistance Listing No. 84.425J, June 30, 2023.

Criteria – Federal regulations relative to HEERF 18004(a)(1) and (2).

Condition – Several non-compliances were noted and considered material given the amount of questioned costs.

Questioned Costs – Construction and Renovation Costs was $3.6 million. Total Salaries and contractual services was $1.3 million (subsequently reclassified $317,000).

Context – We observed the following conditions in connection with our testing of the various USDE, HEERF programs:

a) The College did not obtain required approval before incurring costs from the HEERF HBCU grant on construction and renovation costs. Federal regulations under HEERF (a)(2) stipulates prior-approval from USDE for all construction and renovations projects must be received before commencing any bidding or incurring construction costs. The College incurred and capitalized construction and renovation costs funded by the HEERF HBCU grant totaling $3.6 million in fiscal year 2023.

b) There were several construction and renovation costs incurred for the Health and Wellness Center such as roof replacement, HVAC unit replacement, etc. The Health and Wellness Center houses the gymnasium where athletic events are held. There was no allocable method provided to delineate which area benefitted from the project costs suggesting unallowed costs may have been incurred regarding the gymnasium space. Federal regulations under HEERF (a)(2) explicitly prohibits construction and renovation of athletic facilities, sectarian instruction or religious worship.

c) A number of salaries and contractual services charged to the HEERF HBCU grant appeared to involve responsibilities and services not solely dedicated to the grant. Various positions within the business office were charged to the grant at 100% rate based on time and effort reports examined during testing. A portion of these expenses were subsequently reclassified to operational costs totaling $317,000 out of $1.3 million. Additionally, the full compensation for the director of another active grant was charged to the HEERF HBCU grant. Besides conflicting roles, discerning the allocation of costs associated with COVID-19 prevention, preparation, and response was not consistently apparent.

Cause – Unfamiliarity or misinterpretation of Federal regulations.

Effect – Incurred costs could be disallowed and funds required to be reimbursed back to the Federal government.

Repeat Finding – No.

Auditor’s Recommendation – The College should provide grant-compliant justification to substantiate the questioned costs as a resolution to this matter. A representative at USDE may offer some insight and consideration on retrospective approvals for construction and renovation projects. Also, the specific purpose for all salaries and contractual services charged to the HEERF grants should be documented for better clarity. Views of Responsible Officials – Procedures will be implemented to assure Federal Regulations are properly followed such that HEERF HBCU pre-approvals are obtained from the USdE for all construction and renovation projects. In addition, construction and renovation costs associated with the Health and Wellness Center will be adequately documented to better distinguish them from gymnasium-related expenditures. Time and effort reporting procedures will be more closely monitored for accurate documentation and segregation of unallowable costs from allowable costs. Contact will made to USDE specifically to remedy the disclosed findings noted above.