SOUTHERN CRESCENT TECHNICAL COLLEGE GRIFFIN, GEORGIA INDEPENDENT ACCOUNTANTS REPORT ON APPLYING AGREEDUPON PROCEDURES FOR FISCAL YEAR ENDED JUNE 30, 2018 A Member Institution of the Technical College System of Georgia SOUTHERN CRESCENT TECHNICAL COLLEGE - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES SCHEDULE OF FINDINGS AND QUESTIONED COSTS Page 1 4 GREG S. GRIFFIN STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 5, 2019 Members of the State Board of the Technical College System of Georgia Members of the Local Board of Directors of Southern Crescent Technical College and Dr. Alvetta Thomas, President Southern Crescent Technical College Independent Accountant's Report on Applying Agreed-Upon Procedures Ladies and Gentlemen: We have performed the procedures enumerated below, which were agreed to by Southern Crescent Technical College and the Technical College System of Georgia, solely to assist you in evaluating compliance with federal student financial assistance regulations and meeting the requirements of COC Comprehensive Standard 13.6 for the year ended June 30, 2018. The sufficiency of these procedures is solely the responsibility of the parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Also included in this report is a section on findings and other matters that came to our attention during our engagement. The procedures for each Student Financial Assistance Cluster compliance requirement and the associated findings are as follows: 1. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Activities Allowed or Unallowed compliance requirement. We did not note any exceptions as a result of our procedures. 2. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Cash Management compliance requirement. Upon review of cash drawdowns and disbursements related to the Federal Pell Grant program, excessive cash balances were noted for up to 15 days in the fiscal year. Provisions included in 34 CFR 668.166(a) state, "The Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Secretary." 3. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Eligibility compliance requirement. We did not note any exceptions as a result of our procedures. - 1 - 4. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Matching, Level of Effort, Earmarking compliance requirement. See FA-2018-001 in the Schedule of Findings and Questioned Costs for a detail of exceptions noted. 5. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Period of Performance compliance requirement. We did not note any exceptions as a result of our procedures. 6. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Program Income compliance requirement. We did not note any exceptions as a result of our procedures. 7. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Reporting compliance requirement. We did not note any exceptions as a result of our procedures. 8. Complete applicable procedures reflected in the 2018 and/or 2017 OMB Compliance Supplement for the Special Tests and Provisions compliance requirement. Our review of a sample of 26 students to test the Institution's compliance with 34 CFR 668.22, which is related to the return of Title IV funds, revealed that refunds were not calculated correctly for four students. Two of these students were requested to return $106.50 less and two of these students were requested to return $470.33 more than the required amount to various SFA programs. Furthermore, the refunds processed within the student information system did not agree to the refund amount calculated for four students. In addition, it was also noted that funds were not returned in the appropriate timeframe for four students. See FA-2018-002 in the Schedule of Findings and Questioned Costs for a detail of additional exceptions noted. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which is to express an opinion or conclusion, respectively, on the Federal Student Aid compliance requirements. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. The Georgia Department of Audits and Accounts utilized the assistance of an external specialist in the performance of this engagement. The specialist possesses extensive knowledge and experience in reviewing institutional compliance with requirements related to federal student financial assistance programs. - 2 - This report is intended solely for the information and use of Southern Crescent Technical College, the Technical College System of Georgia and the Southern Association of Colleges and Schools Commission on Colleges and is not intended to be, and should not be, used by anyone other than these specified parties. Respectfully, Greg S. Griffin State Auditor - 3 - SOUTHERN CRESCENT TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FA-2018-001 Strengthen Controls over Matching Requirements Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Numbers and Titles: Federal Award Numbers: Questioned Costs: Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.033 Federal Work-Study Program P033A177313 (Year: 2018) $41,812.50 Description: The Institution did not meet matching requirements associated with the Federal Work-Study (FWS) Program. Criteria: Provisions included in 34 CFR 675.26 and 675.27 provide the compliance requirements for the FWS institutional share necessary. Specifically, provisions included in 34 CFR 675.26(a)(1) state that "the Federal share of FWS compensation paid to a student employed other than by a private-for-profit organization...may not exceed 75 percent unless the Secretary approves a higher share." Condition: Our review of expenditures related to the FWS program revealed that the proper amount was not expended from institutional funds. The total FWS compensation paid to students employed other than by a private for-profit organization was $167,250.00. The Institution should have expended $41,812.50 from institutional funds to be in compliance with Federal regulations. However, no institutional funds were expended for FWS compensation. Questioned Cost: Questioned costs of $41,812.50 were identified for FWS compensation that should have been have been expended from institutional funds. The following CFDA number is affected by the known questioned costs: 84.033. Cause: In discussing these deficiencies with management, they stated that there was a leadership change within the Financial Aid Office in 2017, and as a result of the transition, the Institution did not submit the waiver request for the FWS matching requirement by the deadline as they had routinely done in the past. Effect or Potential Effect: The Institution was not in compliance with Federal regulations concerning the use of FWS program funds. In addition, Federal funds were expended for activities that should have been paid with institutional funds. Recommendation: The Institution should strengthen procedures to ensure that the proper amount of institutional funds is expended for compensation to FWS students or that a waiver for the matching requirement is obtained appropriately. Additionally, the Institution should develop and implement a monitoring process to ensure that controls are properly implemented. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. - 4 - SOUTHERN CRESCENT TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The Institution is revising its Financial Aid Procedure Manual to include clarification on matching requirements associated with the FWS program. The procedures will include a monitoring process to ensure controls are implemented in a timely and appropriate manner. In addition, the Institution will ensure that a waiver is requested each year. Furthermore, the Institution has been granted a waiver for the matching requirement under the FWS program for the 2018-2019 and 2019-2020 award years. Estimated Completion Date: March 1, 2019 Contact Person: Xenia Johns, Vice President for Student Affairs Telephone: (770) 229-3046 Email: xenia.johns@sctech.edu FA-2018-002 Improve Controls over Unofficial Withdrawals Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Numbers and Titles: Federal Award Numbers: Questioned Costs: Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Program P007A177313 (Year: 2018), P033A177313 (Year: 2018), P063P172761 (Year: 2018), P268K182761 (Year: 2018) $3,371.84 Description: Unearned Title IV funds were not identified and returned for students who unofficially withdrew from the Institution. Criteria: The provisions in 34 CFR 668.22 provides requirements over the treatment of Title IV funds when a student withdraws. The Institution is required to determine the amount of Title IV grant that the student earned as of the student's withdrawal date when a recipient of a Title IV grant withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance. A refund must be returned to Title IV programs when the total amount of Title IV grant or loan assistance, or both, that the student earned is less than the amount of the Title IV grant or loan assistance that was disbursed to the student as of the withdrawal date. Condition: Twenty-five students who received Federal financial assistance for the Fall 2017 and Spring 2018 semesters and withdrew from the Institution but for whom no Return of Title IV calculation was performed were selected to determine if a refund should have been calculated. Our examination revealed that refund calculations were not performed appropriately for five of these students who unofficially withdrew during the Fall 2017 and Spring 2018 semesters. - 5 - SOUTHERN CRESCENT TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018 Questioned Cost: Questioned costs of $3,371.84, with likely questioned cost of $81,618.89, were identified for omitted Return of Title IV calculations. The following CFDA number is affected by the known and likely questioned costs: 84.063. Cause: In discussing these deficiencies with management, they stated that the unofficially withdrawn students requiring a Return of Title IV calculation were appropriately identified based upon coding within the student information system. However, the manual process used to record refunds within the student information system was not monitored appropriately and several of the unofficially withdrawn students' aid was not reduced and returned to the U.S. Department of Education as required. Effect or Potential Effect: Unearned Title IV funds were not returned to the U.S Department of Education appropriately. Improperly identifying withdrawn students, not performing Return of Title IV calculations, and/or not returning unearned Title IV funds to the U.S Department of Education in a timely manner may result in adverse actions and impact the Institution's participation in Title IV programs. Recommendation: The Institution should implement policies and procedures to ensure that students who unofficially withdrew and received Title IV funds are identified and the required refund calculation is performed. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The institution will revise the Return of Title IV Unofficial Withdrawal procedure. This revision will strengthen internal controls to ensure that every student who unofficially withdraws and receives Title IV funds is identified, required refund calculations are performed for each student, and funds are returned to the Department of Education. Estimated Completion Date: March 1, 2019 Contact Person: Xenia Johns, Vice President for Student Affairs Telephone: (770) 229-3046 Email: xenia.johns@sctech.edu - 6 -