oversight

Florida Agricultural and Mechanical University's Administration of the Student Financial Assistance Programs.

Published by the Department of Education, Office of Inspector General on 2006-03-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         UNITED STATES DEPARTMENT OF EDUCATION 

                              OFFICE OF INSPECTOR GENERAL 

                                       61 FORSYTH STREET, RM 18T71 

                                         ATLANTA, GEORGIA 30303

                                    PHONE (404) 562-6470 · FAX (404) 562-6509





                                                         March 30, 2006
                                                                                                    Control Number
                                                                                                    ED-OIG/A04F0008

Dr. Castell Bryant
President
Florida Agricultural and Mechanical University
1500 South Martin Luther King Jr. Blvd.
Tallahassee, FL 32307-3100


Dear Dr. Bryant:

This Final Audit Report, titled Florida Agricultural and Mechanical University’s Administration of
the Student Financial Assistance Programs, presents the results of our audit. The objective of our
audit was limited to determining whether Florida Agricultural and Mechanical University (FAMU)
was in compliance with the return of Title IV, basic student eligibility1 and cash management
requirements. Our review of cash management was limited to the Federal Pell grant (Pell grant) and
William D. Ford Federal Direct Loan (Direct Loan) programs. Our review covered disbursements to
students who received Title IV funds during the period July 1, 2003, through June 30, 2004. We
found that FAMU was not in compliance with the return of Title IV requirements and over awarded
Title IV funds. FAMU generally complied with the cash management requirements. We provided
FAMU a copy of the draft report and their comments are attached to the report.



                                                     BACKGROUND 



FAMU is a four-year, public, co-educational institution of higher learning located in Tallahassee,
Florida. FAMU’s student enrollment consists primarily of undergraduates. FAMU offers
bachelor’s degrees in 103 majors/tracks and master’s degrees in 56 majors/tracks. FAMU also
offers two professional degrees and 11 PhD degree programs. FAMU is accredited by the
Southern Association of Colleges and Schools for Title IV purposes.

FAMU participated in the Federal Supplemental Educational Opportunity Grant, the Federal
Work Study, the Federal Perkins Loan, the Federal Pell Grant, and the William D. Ford Federal


1
 Our review of basic student eligibility was limited to the sample of 150 students selected to evaluate FAMU’s
compliance with cash management requirements.
            Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                            Page 2 of 2

Direct Loan programs. FAMU disbursed $17,208,393 in Pell Grant funds and $61,181,762 in
Direct Loan funds for award year 2003-2004.

Recent reviews of FAMU by the Florida State Auditor General’s office, the National Science
Foundation, and Financial Student Aid Case Management noted significant internal control
weaknesses and mismanagement of funds.



                                                 AUDIT RESULTS 



Although we found that FAMU generally complied with the cash management requirements,
FAMU did not comply with the requirements for the return of Title IV funds. In addition, in our
review of student basic eligibility related to FAMU’s cash management, we found that FAMU
improperly disbursed Title IV funds in excess of amounts students were eligible to receive. In
the Other Matter section, we note that FAMU did not properly identify bank accounts that
include federal funds. FAMU concurred with our findings and recommendations and stated that
it has taken corrective actions. We have not audited or evaluated FAMU’s stated corrective
actions. FAMU’s complete written response is attached to the report.

Finding No. 1 - FAMU Did Not Fully Comply With Requirements for the Return of
                Title IV Funds

FAMU did not comply with all requirements for calculating and making returns of Title IV funds
as prescribed in the regulation at 34 C.F.R. § 668.22. Specifically, FAMU did not calculate and
make returns of Title IV funds, did not return the funds in a timely manner, and did not always
calculate the amounts to be returned correctly. We identified 40 students that withdrew, for
whom FAMU failed to calculate a return of Title IV funds. This resulted in $81,110 of unearned
Title IV funds.

The regulations at 34 C.F.R. § 668.22(j)(1) require that an “institution must return the amount of
Title IV funds for which it is responsible . . . as soon as possible but no later than 30 days after
the date of the institution's determination that the student withdrew . . . .”

According to 34 C.F.R § 668.84(a)(1)(i) “[t]he Secretary may impose a fine of up to $27,500 per
violation on a participating institution . . . that – (i) Violates any statutory provision of or
applicable to Title IV of the HEA, [or] any regulatory provision prescribed under that statutory
authority . . .”

We identified a total of 355 Title IV recipients who withdrew from the University and required a
return of Title IV calculation. FAMU did not calculate a return of Title IV for 40 of these
students. For the 40 students we identified $81,110 in unearned Title IV funds. We also found
FAMU did not make timely returns of a total of $14,153 for 12 students, and incorrectly
calculated the returns for two other students – under calculating the amount to be returned to the
Department by $80. With the 40 calculations that were not performed and returns not made and
the 12 untimely returns, 52 or 14 percent of the returns of Title IV were not timely.

          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                                Page 3 of 3


Previous Florida State Auditor General reports2 noted that FAMU has had recurring findings in
accurately calculating returns of Title IV HEA funds for both official and unofficial student
withdrawals and in returning Title IV HEA funds in a timely manner. We found that FAMU had
policies and procedures governing the processing of withdrawals and related returns of Title IV
funds, however, those policies were not adequate to ensure timely communication between the
various offices necessary for making return of Title IV calculations within the required
timeframes. As a result, FAMU failed to make timely returns of Title IV funds totaling $81,190.

Recommendations

We recommend the Chief Operating Officer for Federal Student Aid

1.1 	 Take action to fine FAMU under 34 C.F.R. § 668.84 for the 40 instances of failing to
      make a return of Title IV.

1.2 	 Require FAMU to strengthen its policies and procedures to ensure that required return of
      Title IV calculations are not overlooked and return of Title IV funds are remitted timely.

1.3 	 Require FAMU to remit to the Department the portion of the $81,190 due from the
      university. As a part of final resolution, require FAMU to remit documentation in support
      of their return of Title IV calculations for the 40 students identified for whom FAMU
      failed to make a return of Title IV, and the incorrect calculation for one student.

1.4 	 Calculate and require FAMU to pay imputed interest costs to the Government for the
      $14,153 in Title IV funds for the 12 returns that were not remitted timely and for the Title
      IV funds for the 40 returns not made prior to our review.

Auditee and OIG Comments

FAMU concurred with our finding that the returns were not calculated and returned timely.
They also noted a duplicate student, which we deleted from the finding. FAMU recalculated the
return of Title IV for the students we identified. We did not verify FAMU’s calculation.

Finding No. 2 - FAMU Improperly Disbursed Title IV Funds in Excess of Eligible
                Amounts

FAMU did not always ensure appropriate adjustments were made to subsequent awards to
reduce or eliminate overpayments. Of the 150 students sampled for cash management, we
identified two students who received $2,354 more in Title IV funds than the amounts they were
eligible to receive. Although FAMU made partial adjustments to subsequent disbursements,
those adjustments were insufficient. As a result of the overawards, FAMU owes the Department
$2,354.

The regulations at 34 C.F.R. § 668.61 Recovery of funds, state:

2
    Florida State Auditor General reports 04-168 (finding 03-81), 03-167 (finding 02-084)
              Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                            Page 4 of 4

         (a) If an institution discovers, as a result of the verification process, that an
       applicant received . . . more financial aid than the applicant was eligible to
       receive, the institution shall eliminate the overpayment by--
         (1) Adjusting subsequent financial aid payments in the award year in which
       the overpayment occurred; or
         (2) Reimbursing the appropriate program account by--
          (i) Requiring the applicant to return the overpayment to the institution if
       the institution cannot correct the overpayment . . . or
          (ii) Making restitution from its own funds, by the earlier of the following
       dates, if the applicant does not return the overpayment:
         (A) Sixty days after the applicant's last day of attendance.
         (B) The last day of the award year in which the institution disbursed
       Federal Pell Grant, Federal Perkins Loan, or FSEOG funds to the applicant.

FAMU’s policies and procedures governing the treatment of overawards were not adequate to
ensure that overawards were properly eliminated. FAMU’s policies governing the correction of
overawards provide options including reductions in un-disbursed funds or award reductions. In
both instances noted, FAMU had made adjustments to subsequent disbursements, but the
adjustments were insufficient to eliminate the over-award. FAMU could not explain why it did
not initially identify and eliminate the overawards.

Recommendations

We recommend the Chief Operating Officer for Federal Student Aid require FAMU to

2.1   Reimburse the Department for the $2,354 in overawards identified.

2.2   Strengthen policies and procedures for processing student financial aid awards.

Auditee Comments

The University acknowledged the overpayments shown under this section, and stated
that it has reimbursed the Department for the overpayment.



                                                OTHER MATTERS 



FAMU failed to properly label bank accounts that contained Title IV funds and had no record of
any notification to the bank that the accounts contain federal funds. The regulations at
34 C.F.R. § 668.163(a)(2)(i) and (ii) provide that “an institution must clearly identify that Title
IV, HEA program funds are maintained in [a bank or investment account] by – (i) Including in
the name of each account the phrase ‘Federal Funds’; or (ii) Notifying the bank or investment
company of the accounts that contain title IV, HEA program funds and retaining a record of that
notice . . . .” Although we received confirmation from the bank that it was aware that FAMU’s
accounts all contain or may contain federal funds, we suggested that FAMU issue an official

          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                              Page 5 of 5

notification to the bank and retain a copy of that notification. On September 28, 2005, FAMU
provided documentation of the bank notification and account name change, clearly identifying
that the account contains federal funds.



                        OBJECTIVE, SCOPE, AND METHODOLOGY 



The audit objective was to evaluate FAMU’s compliance with Title IV regulations governing
cash management; basic student eligibility, and return to Title IV funds. Our evaluation of cash
management was limited to the Pell grant and Direct Loan programs. Our audit covered the
administration of the Title IV, HEA programs during the period July 1, 2003, through June 30,
2004.

Because recent reviews of FAMU noted significant internal control weaknesses and
mismanagement of funds, we determined that we would not rely, and did not rely, on FAMU’s
system of internal control.

To accomplish our objective, we reviewed written policies and procedures applicable to
FAMU’s student financial aid processes and interviewed officials and staff in FAMU’s Financial
Aid, Student Accounts, Controller’s, and Registrar’s offices. We obtained data from FAMU’s
Financial Aid, Title IV Accounting, and Registrar’s offices; and ED’s Grant Administration and
Payment System (GAPS), and National Student Loan Data System (NSLDS).

To test FAMU’s cash management, we judgmentally selected two large Pell draws (from the 42
draws made during the review period) and three large Direct Loan draws (from the 80 draws
made during the review period) from GAPS. The selected drawdowns provided for coverage of
70 percent of the Pell funding ($12 million of the total $17.2 million) and 50 percent of the
Direct Loan funding ($31.1 million of the total $61.2 million) for the period under review. We
then randomly selected 30 students from each of the five draws (150 students of the 20,4923
included in all 5 draws), for use in our analysis. We reviewed the selected student files to
determine when the funds were drawn and posted to student accounts. We evaluated basic
student eligibility for all 150 students selected for our evaluation of cash management. We also
verified the award amounts. In addition, we reviewed FAMU’s bank accounts for compliance
with the cash management requirements.

To test FAMU’s compliance with the regulations governing the return of Title IV funds, we
identified students who received Title IV funds and withdrew either officially or unofficially
during the 2003-2004 award year. We conducted a probe sample to determine whether FAMU’s
return of Title IV calculations were made correctly and found that, generally, FAMU’s
calculations were accurate. We reviewed 100% of the Title IV recipients who withdrew to
identify those instances where calculations were not prepared, or were not prepared timely.
Because we found the data provided by FAMU’s Controller’s office did not identify all Title IV
recipients, we used the NSLDS database to identify students who received Title IV funds and the
3
 The total number of students includes duplications, but the samples only included one duplication – one student
was selected from two different drawdowns.
            Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                            Page 6 of 6

amounts of funds received. We identified 355 students who withdrew and received Title IV
funds. We compared all 355 students to FAMU’s return of Title IV calculations to identify any
instance where a calculation should have been made, but was not. To determine the unearned
Title IV funds, we identified the total Title IV funds distributed to each student during the period
of withdrawal as shown in the NSLDS database and the percentage of completion indicated by
the date of withdrawal when known and 50% for unofficial withdrawals.

We relied in part on computer-processed data contained in FAMU’s accounting system, and the
Department’s Grant Administration Payment System (GAPS) and National Student Loan Data
System (NSLDS). We performed limited testing of the data from FAMU’s accounting system to
assure ourselves that the data was reliable to meet our audit objectives. Our testing consisted of
comparing the FAMU accounting system data to student records for 15 of the 150 students in our
sample. We determined that FAMU’s system could be relied on for our review of compliance
with cash management. However, we determined that computer generated data provided by
FAMU for identification of student withdrawals requiring a return of Title IV funds could not be
relied on because FAMU provided two different lists of students requiring a return of Title IV
calculation; therefore, we used data from the Department’s NSLDS to identify students from
FAMU’s list of withdrawals who received Title IV funds.

We conducted our site work at FAMU offices in Tallahassee, FL, from April 11 - 22, 2005 and
May 24 - 26, 2005. An exit conference was held with FAMU officials on October 11, 2005. We
provided a complete schedule of the specific student accounts related to the findings in this
report, for FAMU’s use in reviewing and responding to our report. The audit was conducted in
accordance with generally accepted government auditing standards appropriate for the scope of
the audit described above.



                                    ADMINISTRATIVE MATTERS



Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report, represent the opinions of the Office of Inspector General.
Determinations of corrective action to be taken will be made by the appropriate Department of
Education officials.

If you have any additional comments or information that you believe may have a bearing on the
resolution of this audit, you should send them directly to the following Education Department
official, who will consider them before taking final Departmental action on this audit:

                                                  Theresa S. Shaw
                                                  Chief Operating Officer, Federal Student Aid
                                                  U. S. Department of Education
                                                  Union Center Plaza,
                                                  830 First Street, NE, Room 112G1
                                                  Washington, DC 20202


          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Draft Report
ED-OIG/A04F0008                                                                                                            Page 7 of 7

It is the policy if the U. S. Department of Education to expedite the resolution of audits by
initiating timely action on the findings and recommendations contained therein. Therefore,
receipt of your comments within 30 days would be appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by the
Office of Inspector General are available to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

We appreciate the cooperation and assistance extended by your staff during the audit. If you
have any questions, please contact Mary Allen, Assistant Regional Inspector General for Audit,
at 404-562-6465.

                                                             Sincerely,

                                                             /s/

                                                             Denise M. Wempe
                                                             Regional Inspector General for Audit Services


Attachment




          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
                          Jfflnrioa J\gritul±ural attO c#llttt4attital ~ttib£rzi±~
                                                       TALLAHASSEE, FLORIDA   32307-3100

                                               CASTELL VAUGHN BRYANT, INTERIM PRESIDENT

Excellence With Caring


OFFICE OF THE PRESIDENT                                                                        TELEPHONE: (850) 599- 3225
                                                                                                     FAX :   (850) 561-2152
             February 7, 2006                                                                       TOO:     (850) 561-2784




             Ms. Denise M. Wempe 

             Regional Inspector General for Audit Services 

             United States Department of Education 

             61 Forsyth Street, RM 18T71
             Atlanta, GA 30303

             Dear Ms. Wempe:

             My leadership team and I reviewed and discussed the audit findings as presented by
             _ _ _ _ __ from your office, and generally agree with his findings. The findings
             below are consistent with the findings presented to us during the general annual audit
             conducted by the State of Florida completed a few months earlier.

             Your auditor,             , is aware of the fact that the University is now under new
             leadership and is going through reorganization to strengthen its internal controls, fiscal
             responsibility, and improve its overall compliance in operating the HEA Title IV Financial
             Aid Programs. Our responses to your findings are shown below, following each finding,
             as reported .

                                                AUDIT RESULTS
             Although we found that FAMU generally complied with the cash management
             requirements, FAMU did not comply with the requirements for the return of Title IV funds. In
             addition, in our review of student basic eligibility related to FAMU's cash management, we
             found that FAMU improperly disbursed Title IV funds in excess of amounts students were
             eligible to receive. In the Other Matter section, we note that FAMU did not properly identify
             bank accounts that include federal funds.

              Finding No.1 - FAMU Did Not Fully Comply With Requirements for the
                              Return of Title IV Funds

              FAMU did not comply with all requirements for calculating and making returns of Title IV
              funds as prescribed in the regulation at 34 C.F.R. § 668.22. Specifically, FAMU did not
              calculate and make returns of Title IV funds, did not return the funds in a timely manner,
              and did not always calculate the amounts to be returned correctly. We determined that
              FAMU owes the Department $81,680 as a result of its return of Title IV violations.



                                 FAMU IS AN EQUAL OPPORTUNITY/EQUAL ACCESS UNIVERSITY
Ms. Wempe
February 7,2006
Page 2

The regulations at 34 C.F.R. § 668.22U)(1) require that an "institution must return the
amount of Title IV funds for which it is responsible ... as soon as possible but no later
than 30 days after the date of the institution's determination that the student withdrew ..
"
According to 34 C.F.R § 668.84(a)(1)(i) "[t]he Secretary may impose a fine of up to
$27,500 per violation on a participating institution ... that - (i) Violates any statutory
provision of or applicable to Title IV of the HEA, [or] any regulatory provision prescribed
under that statutory authority ... "


We identified a total of 355 Title IV recipients who withdrew from the University and
required a return of Title IV calculation. FAMU did not calculate a return of Title IV for 41
of these students. For the 41 students we determined that $81,600 should have been
returned. We also found FAMU did not make timely returns of a total of $14,153 for 12
students, and incorrectly calculated the returns for two other students - under
calculating the amount to be returned to the Department by $80. With the 41
calculations that were not performed and returns not made and the 12 untimely returns,
53 or 15 percent of the returns of Title IV were not timely.
                                                   2
Previous Florida State Auditor General reports noted that FAMU has had recurring
findings in accurately calculating returns of Title IV HEA funds for both official and
unofficial student withdrawals and in returning Title IV HEA funds in a timely manner.
We found that FAMU had policies and procedures governing the processing of
withdrawals and related returns of Title IV funds, however, those policies were not
adequate to ensure timely communication between the various offices necessary for
making return of Title IV calculations within the required timeframes. As a result, FAMU
failed to make timely returns of Title IV funds totaling $81,680.

Recommendations
We recommend the Chief Operating Officer for Federal Student Aid
1.1 Take action to fine FAMU under 34 C.F.R. § 668.84 for the 41 instances of failing to
     make a return of Title IV.
1.2 Require FAMU to strengthen its policies and procedures to ensure that required
     return of Title IV calculations are not overlooked and return of Title IV funds are
     remitted timely.
1.3 Require FAMU to remit to the Department, $81,680 in Title IV funds. The amount is
     the total of $80 in Direct Loan funds that FAMU should have returned to the
      Department for the incorrect return of Title IV calculation, and $81,600 in Pell
     Grants and Direct Loans for the 41 students for whom FAMU failed to make a
      return of Title IV.
Ms. Wempe
February 7, 2006
Page 3



1.4 Calculate and require FAMU to pay imputed interest costs to the Government for the
     $14,153 in Title IV funds for the 12 returns that were not remitted timely and for
     the $81,600 in Title IV funds for the 41 returns not made prior to our review.

FAMU'S RESPONSE:           We concur with your find ing that the returns were not
calculated and returned timely. We do, however, want to correct the number of
students affected, and the amount of return owed to the Department.

   1   The number of students in the audit finding was reviewed and it was determined
       by the university that one student on the list was submitted twice. Therefore, the
       number of students who were not calculated timely is 40.
   2. 	The calculation was preformed and the amount owed to the Department of
       Education is $82,280.67 Documentation in support of this calculated amount was
       previously faxed to:-=--:--~-~

   3. 	The University notified each · student whose financial assistance was adjusted
       resulting from these findings.

The University acknowledges that the measures established to timely and correctly
administer the Return of Title IV Funds requirements were insufficient. The University
has since returned the unearned funds to the respective Title IV Federal Programs.

Additionally, under FAMU'S new President and management team, the University has
since reviewed and strengthened its procedures to timely and accurately calculates, and
returns un-earned Title IV Funds to the respective Federal accounts. These new
procedures have been put into place effective with the 2005-2006 program year. These
procedures will be monitored and updated as needed to ensure full compliance.


Finding No.2 - FAMU Improperly Disbursed Title IV Funds in Excess
of Eligible Amounts

FAMU did not always ensure appropriate adjustments were made to subsequent
awards to reduce or eliminate overpayments. Of the 150 students sampled for cash
management, we identified two students who received $2,354 more in Title IV funds
than the amounts they were eligible to receive. Although FAMU made partial
adjustments to subsequent disbursements, those adjustments were insufficient. As a
result of the over awards, FAMU owes the Department $2,354 .
Ms. Wempe
February 7, 2006
Page 4



The regulations at 34 C.F.R. § 668.61 Recovery of funds, state:
      (a) If an institution discovers, as a result of the verification process, that
      an applicant received ... more financial aid than the applicant was
      eligible to receive, the institution shall eliminate the overpayment by-­
      (1) Adjusting subsequent financial aid payments in the award year in
      which the overpayment occurred; or
      (2) Reimbursing the appropriate program account by-- Our mission is
      to promote the efficiency, effectiveness, and integrity of the
      Department's programs and operations.
      2 Florida State Auditor General reports 04-168 (finding 03-81), 03-167
      (finding 02-084) Draft Report ED-OIG/A04F0008 Page 4 of 7
      (i) Requiring the applicant to return the overpayment to the institution if
      the institution cannot correct the overpayment ... or
      (ii) Making restitution from its own funds, by the earlier of the following
      dates, if the applicant does not return the overpayment:
      (A) Sixty days after the applicant's last day of attendance.
      (8) The last day of the award year in which the institution disbursed 

      Federal Pell Grant, Federal Perkins Loan, or FSEOG funds to the 

      applicant. 


FAMU's policies and procedures governing the treatment of over awards were not
adequate to ensure that over awards were properly eliminated. FAMU's policies
governing the correction of over awards provide options including reductions in un­
disbursed funds or award reductions. In both instances noted, FAMU had made
adjustments to subsequent disbursements, but the adjustments were insufficient to
eliminate the over-award. The University could not explain why it did not initially identify
and eliminate the over awards.

Recommendations
We recommend the Chief Operating Officer for Federal Student Aid require FAMU to
     2.1 Reimburse the Department for the $2,354 in over awards identified.
     2.2 Strengthen policies and procedures for processing student financial aid
     awards.
Ms. Wempe
February 7, 2006
Page 5




FAMU'S RESPONSE: The University acknowledges the overpayments shown
under this section, and has reimbursed the Department, as documented in our previous
submission for the overpayment, as recommended by the auditor.

Additionally, under FAMU'S new President and management team, the University has
since reviewed and strengthened its procedures to accurately determine awards and
disbursements of Title IV Funds to students. These new procedures have been put into
place effective with the 2005-2006 program year. These procedures will be monitored
and updated as needed to ensure full compliance.


                                 OTHER MATTERS

FAMU failed to properly label bank accounts that contained Title IV funds and had no
record of any notification to the bank that the accounts contain federal funds. The
regulations at 34 C.F.R. § 668.163(a)(2)(i) and (ii) provide that "an institution must
clearly identify that Title IV, HEA program funds are maintained in [a bank or investment
account] by - (i) Including in the name of each account the phrase 'Federal Funds'; or
(ii) Notifying the bank or investment company of the accounts that contain title IV, HEA
program funds and retaining a record of that notice . . . ." Although we received
confirmation from the bank that it was aware that FAMU's accounts all contain or may
contain federal funds, we suggested that FAMU issue an official notification to the bank
and retain a copy of that notification. On September, 28, 2005, FAMU provided
documentation of the bank notification and account name change, clearly identifying
that the account contains federal funds.

FAMU'S RESPONSE:           The University provided the auditor with documentation that
correspondence was provided to the Bank, informing the Bank that the funds on deposit
included Federal Title IV Funds, as required. The University's new CFO has developed
procedures to assure that all newly established Bank Accounts, which contain Federal
Title IV Funds, will be documented in writing to, and acknowledged by the Bank, to
ensure that the Bank is aware that the account contains Federal dollars, for all such
new accounts which may be open in the future. These procedures will be monitored and
updated as needed to ensure full compliance.
Ms. Wempe
February 7, 2006
Page 6



Please further be advised that Florida A&M University, under my leadership, is
committed to the making the improvements to make our Financial Aid program second
to none in this nation. If additional information or documentation is needed in this
matter, please let us know.

With regards,

/s/

Castell Vaughn Bryant
Interim President


Copy:           James C. McMillan II, Special Assistant for Financial Aid Services
                Gerald Dunn, Vice President and Chief Financial Officer
                Rufus Little, Vice President for Audit and Compliance