Office of the Legislative Auditor - Financial Audit Division

Report Summary
Community College System

Student Financial Aid Programs

Fiscal Year 1994

Background

Test compliance with certain finance-related legal provisions relating to selected federal student financial aid programs administered by the Community College System. We included the following federal programs: Federal Family Educational Loans (FFEL), Federal Perkins Loans, and Federal Pell Grants.

Review significant internal control structure policies and procedures concerning federal student financial aid including: federal financial aid revenues and cash management, federal financial aid packaging and disbursements on selected community college campuses, as well as the systemwide Federal Perkins loan management and repayment process.

Conclusions:

We found 24 areas where community colleges had not complied with federal regulations and 9 areas where internal controls needed to be improved:

• We found that Anoka Ramsey Community College had not adequately defined exceptional need for awarding Federal Perkins Loans and had not complied with certain federal cash management requirements.
• We found that Austin Community College did not adequately safeguard incoming FFEL checks, did not make its Federal Perkins capital contribution in compliance with federal timelines, had inadequate controls over federal financial aid cash, and did not receive federal reimbursement for $4,356 in Federal Pell Grants.
• We found that Brainerd Community College certified a Stafford Loan for more than the annual loan limit, did not adequately safeguard incoming FFEL checks, did not complete independent and timely reconciliations of the federal financial aid checking account, and did not receive federal reimbursement for $450 in Federal Pell Grants.
• We found that Cambridge Community College did not have a satisfactory academic progress policy that met federal guidelines, had not adequately forecasted federal cash needs, and did not resolve conflicting information in three student files.
• We found that Minneapolis Community College did not have exit counseling procedures for FFEL that met federal requirements, allowed certain of its employees to have unnecessary access to the Perkins Loan management System, did not have adequate controls over its federal cash, and had not properly managed its Federal Perkins loan cash.
• We found that Worthington Community College did not have a satisfactory academic progress policy that met federal guidelines, did not comply with federal cash management requirements, submitted inaccurate information on its federal reports, certified several FFEL loans using incorrect information, paid financial aid to an ineligible student, used unreasonable and inaccurate cost of attendance budgets in several areas of the federal aid awarding process, had not adequately defined exceptional need for awarding Federal Perkins Loans, did not comply with federal financial aid transcript requirements, did not receive federal reimbursement for $575 in Federal Pell Grants, and did not comply with Federal Pell Grant regulations concerning consortium agreements.
• We also found that Inver Hills Community College paid an inappropriate Supplemental Loan for Students (SLS) to one student and that Vermilion Community College improperly posted a Federal Perkins loan payment to the college Federal Pell Grant account.