UMES lacks controls over financial aid, audit finds

By Megan Poinski
Megan@MarylandReporter.com

The University of Maryland Eastern Shore has too few people monitoring financial aid, resulting in tens of thousands of aid and grant dollars being called into question, according to legislative auditors. One employee even gave two grants to a relative that were later reduced.

The audit found several areas where few people had sole discretion to make financial aid decisions, and there was no direct supervisory check to ensure that those choices were correct. In addition to a need for more supervisors to review and sign off on decisions, auditors found several examples where grants and scholarships could have been given in error.

“There was a lot of control stuff here,” said Legislative Auditor Bruce Myers.

The university laid out a plan to correct the issues, and Myers said his office is satisfied with their actions.

University Vice President for Administrative Affairs Ronnie Holden said that the university is working through the issues.

“The university is fully accountable for all its activities,” Holden said in an e-mail.
“It is our position there does not seem to be any significant issues – we don’t consider it a bad audit.”

According to the report, the University of Maryland Eastern Shore gave out $44 million in financial aid in fiscal year 2010, including grants and scholarships.

University personnel review 200 different financial aid accounts each semester, but auditors found that they did not check to make sure that the amounts were properly calculated and authorized. If aid amounts were changed during this review, no supervisors had to review and approve them.

One employee gave grants to a relative

Additionally, only one employee was responsible for determining who should get discretionary grants. There was no formal policy defining eligibility criteria, and no documents were kept to support the grant awards. No supervisors reviewed these decisions.

“It’s a little unusual to have one person with the sole discretion over a particular type of grant,” Myers said.

Auditors found that this one employee gave a $1,870 discretionary grant to a relative in 2010. In 2011, the relative received a $3,000 grant from the employee. When auditors pointed the grant out to the university’s upper management, it was reduced to $1,000.  Auditors referred this situation to the State Ethics Commission, since the employee giving grants to a relative may have violated state ethics laws.

There was also no procedure in place to ensure that honors students maintained their grade-point averages in order to keep their scholarships.  Auditors looked at five honors students and found that two of them had received $47,000 in scholarships, but had not maintained the necessary grades.

Student account refunds were also made, for the most part, with no independent review to ensure that they were correct or approved. Auditors found that the only refunds that tended to be reviewed – with people looking at supporting documents to verify the amounts to be refunded – were ones that went to foreign addresses or ones that were for large amounts.

Weak review of in-state residency

Several other problems were found in the audit, including:
·      Poor documentation of residency changes. There was not always adequate documentation to support residency changes – which resulted in a more than 50% tuition reduction – and one of the people who reviewed the applications for residency changes could actually make the changes in the computer system.
·      Unnecessary access to the computer systems to change student residency and grades. Auditors found that there were nine users who did not need their access to change residency, and four people who did not need to be able to change student grades.
·      Several computer system components were not adequately protected. Too many people had administrative access to databases, and there was no requirement to log major actions on the computer system – meaning major breaches of the computer system could go undetected.
·      Computer networks were not secure.
·      Grant accounting was inaccurate.
·      The same person controlled inventories and access to the dietary storeroom. About half of the items purchased in 2010 were not added to the inventory, and one item was extremely short – the inventory said there were 1,253 of it, while there were actually only 86.