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Trustees hear progress on cash reconciliations; federal audit flags NSLDS reporting and ghost-student reporting issues
Summary
System finance staff said cash-reconciliation work is in progress following ERP implementation, and external auditors reported three federal audit findings: the cash-reconciliation material weakness carried into the single-audit, repeat enrollment reporting errors to NSLDS tied to a clearinghouse, and a failure to report a confirmed fraudulent ("ghost") student to the Office of Inspector General.
System finance leaders told the Academic and Student Affairs Committee they are addressing a material weakness in cash reconciliation left over from the recent ERP (Workday) conversion and aim to reconcile cash at the campus level by fiscal year-end.
"The goal is that by the end of this fiscal year the majority of schools would be able to reconcile," Matadi Popa, director of financial reporting, said. Staff described a reconciliation template, mitigations for settlement timing differences and a forensic accounting sprint to identify root causes at a large campus. They rated the project 'yellow' and set a soft milestone of end of April for template operation, with the expectation of substantive improvement by June.
External auditors (CliftonLarsonAllen) reported three findings that will be in the federal single audit: (1) the cash reconciliation material weakness reported as a financial-statement finding; (2) a repeat compliance finding involving late or inaccurate entries to the National Student Loan Data System (NSLDS) caused in part by third-party clearinghouse timing; and (3) a compliance recommendation that the system report confirmed ghost-student fraud to the Department of Education's Office of Inspector General. Auditors noted the ghost-student phenomenon is increasingly prevalent nationwide, particularly in asynchronous online programs and in schemes that exploit stolen identities.
Auditors recommended stronger follow-up with the clearinghouse to ensure timely enrollment reporting and urged campuses to report detected fraud to federal authorities promptly so agencies can track fraud rings.
System staff said they will continue central and campus-level remediation work, use exception reporting from Workday and provide ongoing updates to trustees.
No penalties or sanctions were announced; the findings require corrective action plans and follow-up reporting in future audits.
