Texas A&M University - Kingsville

TEXAS A&M UNIVERSITY - KINGSVILLE Texas A&M University - Kingsville Reference No. 99-555-23 Address Automated Information System Deficiencies Deficiencies in the Texas A&M University - Kingsville (University) financial aid information system resulted in our inability to test certain compliance requirements and costs associated with the Federal Family Education Loans program. U.S. Department of Education The University s information system could not provide the following populations: (1) students who withdrew during the refund period, (2) students who dropped to less than half-time status or to less than full-time status, and (3) transfer students for the Spring 1998 semester. Management made various attempts to produce the requested recipient lists; however, some lists were not produced in a timely manner, or they were incorrect. As a result, we were unable to test compliance requirements relating to refunds, enrollment changes, and Spring 1998 transfers. Therefore, we are unable to determine if the University complied with federal compliance requirements. Title 34 of the Code of Federal Regulations, Section 668.16, establishes standards of administrative capability that apply to institutions participating in any student financial assistance program authorized by Title IV of the Higher Education Act (HEA) of 1965. Universities must maintain these standards to continue participation in the program. The first of these standards requires that an institution administer Title IV HEA programs in accordance with all statutory and regulatory provisions. Section 668.24 (a)(3) requires that an institution establish and maintain records documenting its administration of Title IV HEA programs. Management was unable to provide us with sufficient information to enable us to establish its compliance with requirements for the student recipient populations cited in this finding. Title 34 of the Code of Federal Regulations, Section 668.22, requires the institution to make refunds to the student and/or University in the proper amounts and in a timely manner. In addition, the refunds should be applied to the federal programs as cited. Title 34 of the Code of Federal Regulations, Section 682.610 (c), requires the institution to report enrollment changes to the guaranty agency or U.S. Department of Education within 60 days. If an institution does not expect to report enrollment changes on the Student Status Confirmation Report (SSCR) within the next 60 days, that institution is required to notify the guaranty agency or the lender by letter within 30 days. Title 34 of the Code of Federal Regulations, Section 668.19, requires that a financial aid transcript be obtained before disbursing aid to any student who previously attended another institution. JUNE 1999 AND COMPLIANCE AUDIT RESULTS SAO REPORT NO. 99-555

SCHEDULE OF FINDINGS AND QUESTIONED COSTS The University should modify its automated information system as deemed necessary in order to allow management to document and demonstrate its administration of its Title IV HEA programs in compliance with all applicable provisions. We concur with the recommendation made. The Student Financial Aid system, FAM, is now running on a new operating system, AIX-DB2. As a result of the conversion to our new platform, AIX-DB2, we have experienced greater response time and accessibility to tables and fields. We plan to test the new system to generate the required reports related to transfer, refund, and enrollment changes and review the data for accuracy and completeness. Modifications will be made to the system as necessary. In addition, we will coordinate with management to ensure management is satisfied with the system reports and documentation. Hence, report generating has been simplified and compliance to all programs can be monitored with ease. Implementation Date: January 4, 1999 Application Analyst Reference No. 99-555-26 Maintain Enrollment Change Documentation not maintaining copies of the Student Status Confirmation Report (SSCR) for three years as U.S. Department of Education required for the Federal Family Education Loans program. As a result, no testing could be conducted on enrollment changes to determine if the changes had been reported correctly and within the required time frame. Changes that are not reported in a timely manner to the lender, guarantor, or U.S. Department of Education could result in lost interest to the federal government. Currently, the University is transmitting the SSCR reports electronically to the National Student Loan Data System (NSLDS). However, electronic copies of the reports are not being maintained. Prior copies of the SSCRs are being overwritten by more recent copies. Title 34 of the Code of Federal Regulations, Section 682.610 (c), requires the institution to report enrollment changes to the guaranty agency or U.S. Department of Education within 60 days. If an institution does not expect to report enrollment changes on the SSCR within the next 60 days, that institution is required to notify the guaranty agency or the lender by letter within 30 days. SAO REPORT NO. 99-555 AND COMPLIANCE AUDIT RESULTS JUNE 1999

TEXAS A&M UNIVERSITY - KINGSVILLE Title 34 of the Code of Federal Regulations, Section 668.24, requires the institution to retain records for a minimum of three years after the end of the award year in which the records are submitted. We recommend the University maintain enrollment change documentation submitted to NSLDS for a required minimum of three years. We concur with the recommendation made. Beginning with the submission on December 21, 1998, the University is now maintaining the electronic file on a CD for a minimum period of three years. Each submission is maintained on the CD under the date of submission. The University has implemented this procedure to ensure that the University will be in compliance with the federal regulations relating to student status changes and record retention requirements. Implementation Date: December 21, 1998 Financial Aid Officer Reference No. 99-555-24 Develop and Implement Formal Policies and Procedures Over Monitoring Security Violations CFDA 84.007 - Supplemental Educational Opportunity Grants CFDA 84.033 - Federal Work-Study Program CFDA 84.038 - Federal Perkins Loan Program - Federal Capital Contributions CFDA 84.063 - Federal Pell Grant Program not generating automated security reports to monitor security, and it does not have documented internal U.S. Department of Education policies and procedures for following up on reported security violations. The University reports security violations to its Human Resources Department, but there is no formal process in place to monitor this practice on a regular basis. Without a formal process in place, unauthorized changes could be made to data relating to the student financial aid programs. This could potentially affect all student financial aid programs administered, including the Federal Family Education Loans program and the Federal Pell Grant Program. Automated security reports and documented policies and procedures ensure that security violations are identified and properly handled in an effective and efficient manner. They also identify proper conduct for employees using computer systems. Without written JUNE 1999 AND COMPLIANCE AUDIT RESULTS SAO REPORT NO. 99-555

SCHEDULE OF FINDINGS AND QUESTIONED COSTS policies and procedures, the risk of weakened computer security is higher, and security awareness among staff is lower. The University should generate automated security reports to monitor security and establish documented policies and procedures for following up on reported security violations. Texas A&M University - Kingsville uses the AMKAIX1 mainframe system. AMKAIX1 supports the operating systems used by the University. The following procedures will be implemented beginning March 1999 to ensure that security is adequately monitored: 1. Run reports from system accounting and auditing (and other) security related data sources on a weekly basis 2. Re-examine file and directory permissions on the entire AMKAIX1 system and set them for a production environment now that conversion is complete 3. Re-examine our general security policies and procedures and update them as necessary to comply with the conversion to the new system. This will include policies and procedures to follow up on reported security violations. Implementation Date: March 31, 1999 Assistant Director - Computing and Information Services Reference No. 99-555-27 Delay Disbursements to First-Time, First-Year Borrowers not delaying disbursements to first-time, first-year borrowers of the Federal Family Education Loans U.S. Department of Education program until 30 days after the first day of the student s program of study. In 9 of 28 (32 percent) student files tested, the University disbursed funds to the first-time, first-year borrowers prior to the 30th day after the first class day. The exceptions noted were due to the University counting 30 days from the first day of classes rather than 30 days after the first day of classes. Noncompliance with this requirement could result in an increased default rate. Title 34 of the Code of Federal Regulations, Section 682.604 (c) 5, states that an institution may not release the first installment of a Federal Family Education Loan for SAO REPORT NO. 99-555 AND COMPLIANCE AUDIT RESULTS JUNE 1999

TEXAS A&M UNIVERSITY - KINGSVILLE endorsement to a student who is enrolled in the first year of an undergraduate program of study and who has not previously received a Federal Family Education Loan until 30 days after the first day of the student s program of study. We recommend the University delay disbursements to first-time, first-year borrowers for the first 30 days after the first day of classes as required by federal regulations. This can be done by ensuring that the 30th day after the first day of classes is correctly entered into the financial aid automated system. We concur with the recommendation made. The University has recalculated the date for first-time, first-year borrowers and has placed that date into our system beginning with the Spring 1999 semester. To ensure that we are in strict compliance we have set the disbursement date for the 30th class day after the first day of classes. This date will be used for the certifications of loans. This implemented procedure will ensure that disbursements are delayed to first-time, first-year borrowers. Implementation Date: January 4, 1999 Financial Aid Officer Reference No. 99-555-29 Obtain Financial Aid Transcripts CFDA 84.063 - Federal Pell Grant Program not obtaining financial aid transcripts for all transfer students who receive federal financial assistance. U.S. Department of Education Five of the 40 (13 percent) Federal Family Education Loans program and Federal Pell Grant Program student files tested did not include a transcript obtained in accordance with federal regulations. The transcripts were subsequently obtained, but not before disbursement of the federal funds. Noncompliance with this requirement could result in a financial liability to the University in the event students are found to be over awarded or in default. Title 34 of the Code of Federal Regulations, Section 668.19, requires that a financial aid transcript be obtained before disbursing aid or before disbursing the second payment of Federal Pell Grant Program funds to any student who previously attended another institution. An official authorized by the institution providing the transcript must sign the transcript. JUNE 1999 AND COMPLIANCE AUDIT RESULTS SAO REPORT NO. 99-555

SCHEDULE OF FINDINGS AND QUESTIONED COSTS We recommend the University obtain financial aid transcripts for all transfer students before disbursing federal financial assistance. We concur with the recommendation made. Admissions and Financial Aid automatically exchange information about a student s previous education when either an application for admission or a Financial Aid application is received. However, if a student fails to report other institutions attended to the Admissions or Registrar s Office, we will capture the data from our Financial Aid application. This information will be routed through the Data Entry Clerk in the Financial Aid Office, who will then post the information to the system. If the attendance is less than 90 days prior to the current semester, a request will be sent to the other institution for a Financial Aid Transcript. However, if attendance was more than 90 days prior to the current semester, the Financial Aid Transcript will be downloaded from the NSLDS. No financial aid assistance will be disbursed until all official Financial Aid Transcripts have been received and evaluated to ensure that a student is not over awarded or in default. Implementation of this procedure will ensure that the University is in compliance with the federal compliance requirement. Implementation Date: December 28, 1998 Student Financial Aid Officer Reference No. 99-555-30 Maintain Complete and Accurate Information to Support Adjustments to Students Budgets CFDA 84.063 - Federal Pell Grant Program Texas A&M University - Kingsville (University) does not maintain complete and accurate information to support adjustments to students budgets. A U.S. Department of Education student budget is a calculation based on hours enrolled per semester, housing status, and dependent/independent status. Based on the student budget, the University determines financial need and the amount of the award package. For 1 of 29 (3 percent) student files tested, the student s budget was higher than the standard amount established by the University. Lack of documentation to support increases can result in questioned costs and a potential liability to the University. Our review of one student s record showed an increase in travel and miscellaneous expenses. However, the file had no documentation to support the increase in the budget. The student s budget was $11,099, which was $1,724 more than the standard. Support was subsequently provided by the institution to explain the difference. SAO REPORT NO. 99-555 AND COMPLIANCE AUDIT RESULTS JUNE 1999

TEXAS A&M UNIVERSITY - KINGSVILLE Title 34 of the Code of Federal Regulations, Section 668.24, requires institutions administering federal aid programs to establish and maintain adequate student records. Student files should support student eligibility and awards, and the files should be systematically organized. The University should maintain complete and accurate records to support adjustments to students budgets. We concur with the recommendation made. The University has implemented a procedure to maintain complete and accurate records to support adjustments to a student s budget. Travel or Miscellaneous Expenses will be the only factors adjusted in the budget. A student will submit the proper documentation and only a percentage above those costs allocated through the standard budget will be allowed. The amount allowed will not exceed 50% of the excess over the standard for travel and/or miscellaneous. The documentation will be kept in the student s records. Implementation of this procedure will ensure compliance with the federal compliance requirement. Implementation Date: December 28, 1998 Associate Director, Student Financial Aid Reference No. 99-555-32 Report Pell Payment Data to U.S. Department of Education Within 30 Days CFDA 84.063 - Federal Pell Grant Program not reporting payment data on the Federal Pell Grant U.S. Department of Education Program to the U.S. Department of Education (Department) within 30 days as required. The University failed to report data on 1 out of 29 (3 percent) students for both the Fall and Spring semesters. The University states that the unreported data was an administrative oversight. Failure to properly report all payment data could result in the submission of inaccurate data, due to adjustments to actual disbursements, to the Department. The 1998 Office of Management and Budget Circular A-133 Compliance Supplement states that institutions must report student payment data within 30 calendar days after the school makes a payment or becomes aware of the need to make an adjustment to previously reported student payment data or expected student payment data. Schools may do this by reporting once every 30 calendar days, bi-weekly, weekly, or may set up their own system to ensure that changes are reported in a timely manner. JUNE 1999 AND COMPLIANCE AUDIT RESULTS SAO REPORT NO. 99-555

SCHEDULE OF FINDINGS AND QUESTIONED COSTS We recommend that the University report Federal Pell Grant Program payment data within 30 calendar days after making a payment or after it becomes aware of the need to make an adjustment to previously reported payment data. We concur with the recommendation made. Pell payment data submissions are made on a weekly basis to the Department of Education. We have tightened screening of payment information for accuracy and compliance to set regulations. The Student Financial Aid Office generates a listing of all students paid. Vouchers are then electronically submitted to the Department of Education within a week following payment to the student. Further, follow-up is performed subsequently to the vouchers submitted to Department of Education to ensure payment is received. Implementation of these additional procedures will ensure compliance with the federal requirement. Implementation Date: January 4, 1999 Application Analyst SAO REPORT NO. 99-555 AND COMPLIANCE AUDIT RESULTS JUNE 1999