UNITED STATES DEPARTMENT OF EDUCATION OFFICE OF INSPECTOR GEI\"ERAL 1999 BRYAN STREET. HARWOOD CENTER. SUITE 2630 DALLAS. TEXAS 75201-6817 PHONE: (214) 880-3031 FAX: (214) 880-2492 J. i'-,: 9 2002 MEMORANDUM TO Greg Woods Chief Operating Officer Federal Student Aid FROM Sherri L. Demmel Regional Inspector General for Audit SUBJECT: Final Audit Report, WADE COLLEGE Control Number ED-OIO/A06-C0019 Attached is our subject report presenting our findings and recommendations resulting from our audit of Wade College. In accordance with the Department's Audit Resolution Directive, you have been designated as the action official responsible for resolution of the findings and recommendations in this report. If you have any questions, please contact me at 214-880-3031. Please refer to the above control number in all correspondence relating to this report. Attachment Our mission is to promote the efficiency, effectiveness. and itltegrity of the Depanmenr's programs and operatiolls C~ITED STATES DEPARTMEl'IT OF EDUCATION OFFICE OF INSPECTOR GE~ERAL 1999 BRYAN STREET, HARWOOD CEI'TER, SUITE 2630 DALLAS, TEXAS 75201-6817 PHOSE: (214) 880-3031 FAX: (214) 880-2492 JUN ) 9 2002 Frank Tortoriello, Jr. President Wade College P. O. Box 586343, In!'l Apparel Mart Dallas, TX 75258-6343 Dear Mr. Tortoriello: This Final Audit Report (Control Number ED-OIG/A06-C0019) presents the results of our audit of Wade College's (Wade) compliance with Title IV of the Higher Education Act of 1965 (HEA), as amended, and selected regulations governing Federal Student Financial Assistance (SFA) programs during the period July 1,2000, through December 31, 2001. Wade College agreed with our findings and recommendations during our exit conference on April 4, 2002. The audit objective was to determine whether Wade administered the Title IV programs according to selected aspects of the SFA program laws and regulations authorized by the HEA, as amended. To accomplish this objective we focused on determining if Wade complied with the 90 Percent Rule, the use of professional judgment (including dependency overrides), student eligibility, Title IV disbursements, return of Title IV funds, financial responsibility, and institutional and program eligibility. AUDIT RESULTS During the audit period, Wade generally administered the SFA programs in accordance with the REA and selected regulations. However, we found errors in Wade's calculation of the return of Title IV funds. Institutions are required to calculate returns of Title IV funds for students who withdraw according to procedures in the regulations at 34 C.F.R. § 668.22. During our review of records for 60 randomly selected students, we identified 31 students requiring a return of Title IV funds calculation. We found that Wade had miscalculated the return of Title IV funds for 13 students: • Return of Title IV was miscalculated for returns to the Direct Loan program for 4 students, resulting in a liability of $3,746. • Return of Title IV was miscalculated for returns to the Pell Grant program for 2 students, resulting in an underpayment of $2,175. • Return of Title IV was miscalculated for the remaining 7 students resulting in no change in the amounts to be returned. Our mission is to promOfe (he efficiency, effectiveness. and integrity of the Department's programs and operations Mr. Tortoriello Page 2 of 3 RECOMMENDATIONS We recommend the Chief Operating Officer for Federal Student Aid require Wade to: 1. Return the $3,746 to the Direct Loan Program; 2. Credit the proper students’ accounts; 3. Recalculate all refunds, return any under payment to the appropriate Federal account, and make any required adjusts to the proper students’ accounts; and 4. Evaluate its procedures to ensure returns of Title IV funds are accurately calculated. BACKGROUND Wade is a two-year proprietary school located in Dallas, Texas. It received initial approval to participate in the Title IV, SFA programs on February 3, 1971. The Southern Association of Colleges and Schools Commission on Colleges accredited the school and the Higher Education Coordinating Board, Texas College and University System authorizes them to operate in the State. Wade offers an associate degree in Merchandising and Design. During the award years 1999-2000 and 2000-2001, they received approximately $1.6 million and $1.3 million in Title IV funds, respectively. Wade participates in William D. Ford Direct Loan, Federal Perkins Loan, Federal Work-Study, Federal Supplemental Educational Opportunity Grant, and Federal Pell Grant programs. OBJECTIVE, SCOPE, AND METHODOLOGY The audit objective was to determine whether Wade administered the Title IV programs according to selected aspects of the SFA program laws and regulations authorized by HEA, as amended. To accomplish this objective we focused on determining if Wade complied with the 90 Percent Rule, the use of professional judgment (including dependency overrides), student eligibility, Title IV disbursements, return of Title IV funds, financial responsibility, and institutional and program eligibility. Our audit fieldwork was performed at Wade’s offices in Dallas, Texas, from March 4-21, 2002. We interviewed Wade College, Armstrong and Associate (auditor), and Department of Education officials. We reviewed 1) Department administrative and program review files; 2) federal laws, regulations, and other guidance regarding Title IV programs; 3) Wade's administrative and accounting files, policies and procedures; 4) Wade’s 2000 Compliance Audit; and 5) Wade’s 2000 Financial Statement Audit and associated working papers. We tested a sample of 60 student files to determine the appropriateness of Title IV funding to the students. We pulled the sample from a population of 242 students who received Pell grants and/or William D. Ford Direct Loans. We relied on a computer-generated universe of students from the National Student Loan Data System to derive our audit sample. Our audit covered the period from July 1, 2000, through December 31, 2001. We conducted an exit conference on April 4, 2002, at which time you agreed with our findings. Mr. Tortoriello Page 3 of3 STATEMENT ON MANAGEMENT CONTROLS As part of our review, we assessed Wade's management controls, policies, procedures. and practices applicable to the scope of the audit. We assessed the level of control risk for detennining the nature, extent, and timing of our substantive tests Our audit was made only for the limited purpose described and would not necessarily disclose all material weaknesses in Wade's administration of the Title IV programs. However, our assessment disclosed a weakness related to return of Title IV fund calculations. This weakness is discussed in the Audit Results section of this report. ADMINISTRATIVE MATTERS The conclusions in this report represent the opinions of the Office of Inspector General. You are not required to respond to this report. However, if you have any comments or infonnation that you believe may have a bearing on this audit, you should send them directly to the following Education Department Official: Mr. Greg Woods, Chief Operating Officer Federal Student Aid U.S. Department of Education Union Center Plaza, Room 112G 1 830 First Street, NE Washington. DC 20202 In accordance with the Freedom of Information Act (5 U.S.C. §552), reports issued by the Office of Inspector General are available, if requested, 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. You are not required to respond to this report. However, if you desire to discuss it, please call me at 214 880-3031. Sincerely, Sherri L. Demmel Regional Inspector General forAudit electronic cc: Faye Harris, FSA Charles Johnson, Area Director, Dallas Case Management Team Pat Howard, Director FSA Advice & Assistance REPORT DISTRIBUTION LIST CONTROL NO. ED-OIG/A06-C0019 Auditee ED Action Official Mr. Frank Tortoriello, Jr., President Mr. Greg Woods Wade College Chief Operating Officer P. O. Box 586343, Int’l Apparel Mart Federal Student Aid Dallas, TX 75258-6343 Other ED Officials/Staff (electronic copy) Audit Liaison Officer Press Secretary Case Management Division Office of Public Affairs Federal Student Aid Correspondence Control Assistant General Counsel Office of General Counsel Office of the General Counsel Assistant Secretary Deputy Secretary Office of Legislation and Office of the Deputy Secretary Congressional Affairs Assistant Secretary Chief of Staff Office of Intergovernmental Office of the Secretary and Interagency Affairs Director Under Secretary Financial Improvement and Office of the Under Secretary Post Audit Operations Office of the Chief Financial Officer Post Audit Group Supervisor Director Financial Improvement and Office of Public Affairs Post Audit Operations Office of the Chief Financial Officer Indirect Cost Group Supervisor Financial Improvement and Post Audit Operations Office of the Chief Financial Officer Others (electronic copy) The Council on Occupational Education
Published by the Department of Education, Office of Inspector General on 2002-06-19.
Below is a raw (and likely hideous) rendition of the original report. (PDF)