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A Report on State of Texas Compliance with Federal Requirements for the Student Financial Assistance Cluster for the Fiscal Year Ended August 31, 2014

February 2015

Report Number 15-021

Overall Conclusion

With the exception of certain non-compliance disclosed in this report, the State of Texas complied in all material respects with the federal requirements for the Student Financial Assistance Cluster in fiscal year 2014.

As a condition of receiving federal funding, U.S. Office of Management and Budget (OMB) Circular A-133 requires non-federal entities that expend at least $500,000 in federal awards in a fiscal year to obtain annual Single Audits. Those audits test compliance with federal requirements in up to 14 areas that may have a material effect on a federal program at those non-federal entities. Examples of the types of compliance areas include eligibility and reporting. The requirements for 1 of those 14 areas vary by federal program and outline special tests that auditors are required to perform, such as determining whether a higher education institution (1) accurately verified information on a student's financial assistance application or (2) properly calculated the amount of unearned Student Financial Assistance Cluster funds it needed to return to the federal government. The compliance areas determined to be direct and material may vary significantly among audited entities. Therefore, a comparison of the number of reported findings among entities included in this report may not be an accurate indicator of performance. The Single Audit for the State of Texas included (1) all high-risk federal programs for which the State expended more than $73,923,376 in federal funds during fiscal year 2014 and (2) other selected federal programs.

From September 1, 2013, through August 31, 2014, the State of Texas expended $49.1 billion in federal funds. The State Auditor's Office audited compliance with requirements for the Student Financial Assistance Cluster at 16 higher education institutions. Those 16 higher education institutions spent $2.2 billion in federal Student Financial Assistance Cluster funds during fiscal year 2014.

Auditors identified 35 findings for the Student Financial Assistance Cluster, including:

- Two findings classified as material weaknesses and material non-compliance.

- Twenty-nine findings classified as significant deficiencies and non-compliance.

- Four findings classified as non-compliance.

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