Dr. Dennis Michaelis Page 2 of 4 MCC’s Director of Financial Aid told us that MCC agreed incorrect verification results were reported to the Department and that the school had begun a process to ensure verification status codes were reported accurately. MCC also agreed that it had not corrected all of the errors identified as a result of verifying the two recipients’ applications. The school provided documentation that showed it refunded the $486 to the Department. A copy of MCC’s response is enclosed. Based on the corrective actions MCC took in response to our findings, we have no recommendations in this report. Verification Requirements Verification of information submitted by applicants for Title IV assistance is governed by Subpart E of Title 34, Code of Federal Regulations (34 CFR), Part 668. Applicants must submit information on income, family size, and other data to the CPS. The CPS uses the information to determine each applicant’s expected family contribution (EFC) and Title IV eligibility. To ensure the information is correct, the CPS selects certain applications for verification based on edits specified by the Secretary. Pursuant to 34 CFR § 668.54, schools must require each applicant selected for verification to complete the verification process, except no school is required to verify more than 30 percent of its total number of applicants. Schools are required to verify five major data elements reported by students on their financial aid applications (34 CFR § 668.56). These elements are adjusted gross income, income tax paid, household size, number enrolled in college, and certain untaxed income/benefits. Schools and applicants must complete verification by established deadlines or the applicants forfeit their Pell Grant for the award year, may not receive any other Title IV disbursements, and must repay to the institution any FSEOG or Perkins Loan disbursements received. The institution must return to the lender or the Secretary, in the case of Direct Loans, any Stafford loan or subsidized Direct Loan proceeds that would otherwise be payable to the applicants and return to the appropriate program account any Pell Grant, FSEOG, or Perkins Loan disbursements not repaid by the student. For the Federal Pell Grant Program, the school has completed verification when it has corrected the applicant’s data or determined that the application data are correct. Except for the Federal Stafford Loan and William D. Ford Federal Direct Loan programs, schools are allowed to make an interim disbursement before verification is completed as long as the school has no reason to believe the application information is inaccurate. The school must document the verification and have on file the final and valid federal output document showing the student’s official EFC. When a school disburses a Federal Pell Grant, it must report the disbursement and the results of verification to the Department’s Recipient and Financial Management System (RFMS). Schools use verification status codes to report verification results. Proper reporting of these codes shows that the verification procedures have been followed and allows the Department to gather information on the effectiveness of the verification requirements. Verification results do not have to be reported for loan only students. Dr. Dennis Michaelis Page 3 of 4 OBJECTIVES, SCOPE AND METHODOLOGY The objectives of our audit were to determine if MCC completed the verification of student financial aid applications and reported accurate verification results to the Department. We selected MCC for audit because the school reported that it found the application data were accurate for all of its Federal Pell Grant recipients for whom verification was completed (MCC reported that it had not completed verification for one recipient). To accomplish our objectives, we obtained background information about the school. We reviewed MCC’s financial aid files for 50 randomly selected recipients from the universe of 813 Federal Pell Grant recipients who were selected for verification in award year 1999-00 (July 1, 1999, through June 30, 2000). We interviewed school officials and reviewed the school’s policies and procedures relating to verification. We reviewed MCC’s compliance audit report for its fiscal year ended August 31, 2000. We relied on computer-processed data obtained from the RFMS for background information and to select a random sample of Federal Pell Grant recipients for review. We performed limited tests of the data to verify reliability by comparing the data to information in MCC’s student files. Based on the results of these tests, we concluded that the computerized data was sufficiently reliable to formulate conclusions associated with the objectives of our audit. Our audit covered the period from July 1, 1999, through June 30, 2000. We performed fieldwork during January 8-10, 2001, at MCC in Waco, Texas. We conducted our exit conference on January 10, 2001. Our audit was performed in accordance with generally accepted government auditing standards appropriate to the scope of the review described above. STATEMENT ON MANAGEMENT CONTROLS As part of our review, we assessed MCC’s management controls, policies, procedures, and practices applicable to the scope of the audit. We assessed the level of control risk for determining the nature, extent, and timing of our substantive tests. For the purposes of this report, we assessed and classified the significant management controls into the following categories: (1) completion and documentation of verification, and (2) reporting verification results to the Department. Because of inherent limitations, a study and evaluation made for the limited purposes described above would not necessarily disclose all material weaknesses in management controls. However, our assessment disclosed a weakness related to reporting verification results to the Department. This weakness is discussed in the AUDIT RESULTS section of this report. DISTRIBUTION SCHEDULE Control Number OIG/A06-B0010 Copies Auditee 1 Mr. Dennis Michaelis, President McLennan Community College Action Official 1 Greg Woods, Chief Operating Officer Student Financial Assistance Department of Education ROB-3, Room 4004 7th and D Streets, SW Washington, DC 20202-5132 Other ED Offices Chief of Staff, Office of the Secretary 1 Deputy Secretary, Office of the Deputy Secretary 1 Director, Budget Service, Office of the Under Secretary 1 Director, Office of Public Affairs 1 General Manager for Schools, Student Financial Assistance 1 Chief Financial Officer, Student Financial Assistance 1 Director, Case Management and Oversight, Student Financial Assistance 1 Area Case Director, Dallas Case Management Team, Case Management and Oversight, Student Financial Assistance 1 General Counsel, Office of the General Counsel 1 Office of Inspector General Inspector General 1 Deputy Inspector General 1 Assistant Inspector General for Analysis and Inspections 1 Assistant Inspector General for Investigation 1 Assistant Inspector General for Audit 1 Deputy Assistant Inspector General for Audit 1 Director, Student Financial Assistance 1 Regional Audit Offices 6 Dallas Regional Office 6 Others Texas Guaranteed Student Loan Corporation 1 Southern Association of Colleges and Schools 1 DATA DATAINPUT INPUTSHEET SHEET OIG OIG OFFCODE: 06 AUDIT TYPE: A A C N: B0010 Proj Audits of Selected Postsecondary PROJ MGR#: 2000017 Name: Institutions AWPI PI STATEGIC GOAL #: 2 (1, 2,3) TITLE: McClennan Community College STATE TX FROM TO PERIOD 10/1 /99 AUD SCOPE: 3 PROGRAM OFFICE: AUDITED: 9/30/00 3 DIRECT TIME (Y/N): Y JOB STATUS CODE: 6 ENTITY CODE #: 31 PLANNED START DATE: DATE NEEDED BY 2/2001 AUDIT PLAN BUDGET: (STAFF DAYS) AFTER FY 1ST YR INTIAL SURVEY REVISED 2ND YR TOTAL 50 SURVEY LEAD AUDITOR: Emp#: 2375 Name: Vanessa Walters CFDA CODE: 84.032 84.063 FINAL REPORT (Check One) Planned Date Actual Date 1. Assignment Start 1/8/01 ALTERNATIVE PRODUCT Code = 5 2. Planning Conf. NO REPORT Code = 0 3. Entrance Conf. 1/8/01 ISSUED W/FINDING X Code = 1 4. Survey Complete 1/24/01 5. Team Complete 5/11/01 ISSUED W/O FINDING Code = 2 6. Draft Report Code = 4 REPORT CANCEL 7. Comments Rec’d PREPARER’S SIGNATURE DATE 8. Final Report 7/23/01 Approved By: AWP.FRM 2/97 OIG DATA INPUT SHEET ACN: A06-B0010 OIG (only to be used for finding code 1) Questioned Costs Number of Total $486 Findings 1 Finding Number: $ Amount Significant Recommendation # Significant 1 486 Unsupported Costs Number of Total $ Findings Finding Number: $ Amount Significant Recommendation # Significant
McLennan Community College's (MCC's) compliance with the Title IV, Student Financial Assistance, verification requirements.
Published by the Department of Education, Office of Inspector General on 2001-07-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)