oversight

Wade College.

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)

                         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

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                               The Council on Occupational Education