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KENTUCKY STATE UNIVERSITY Schedule of Findings and Questioned Costs, continued

Year ended June 30, 2013

Finding 2013-004:

Federal Program: U.S. Department of Education Federal Pell Grant Program, CFDA 84.063

Condition:

During the audit, we noted one student who was selected for verification had an education tax credit of $4,500 improperly excluded from their parent's calculation of adjusted gross income.

Criteria:

Per the provisions of CFR 34 §668.59 for the Federal Pell Grant Program, if an applicant's FAFSA information changes as a result of verification, an institution must recalculate the application's Federal Pell Grant on the basis of the EFC on the corrected valid ISIR and disburse any additional funds under that award.

Cause:

The cause of the finding is due to a lack of management oversight and internal controls in place to ensure that files verified are completed accurately.

Effect:

A student did not receive the full amount of Pell they were eligible for at the beginning of the school year.

Recommendation:

We recommend the University review its current procedures related to the verification process and make the necessary changes to ensure that each student file verified is accurate.

Management Response:

We have updated current procedures for Verification Correction close-out to included receipt of appropriate new ISIR transaction and all expected verified field have been accurately updated prior to closing out the Correction.

Finding 2013-005:

Federal Program: U.S. Department of Education Federal Pell Grant Program, CFDA 84.063

Condition:

During the testing of Return of Title IV Funds, we noted one student for which the incorrect withdrawal date was used in the calculation.

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