Home New loan Audit Finds LSU Mishandled Loan Records, Mistakenly Received Federal Funds for Lost Investment Income | New

Audit Finds LSU Mishandled Loan Records, Mistakenly Received Federal Funds for Lost Investment Income | New

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An LSU audit revealed problems in the management of student funds and loans.

Louisiana’s Legislative Auditor conducted its annual audit of the LSU system for fiscal year 2021. The auditor, Mike Waguespack, released the report on May 23. One of the most significant issues found was the inaccurate tracking of active and inactive federal loans.

The audit sampled 80 loan files from LSU’s 3,189 total Federal Perkins loans. Forty of the files were for active loans and 40 for inactive loans. Ninety-three percent of the sample of active loans were not kept in fireproof safes and a repayment schedule could not be found. Of the 40 inactive loan files, 13% did not include the correct documents.

LSU responded to the report’s findings. According to the letter attached to the report, LSU is already in the process of changing the mishandling of loan records.

Ernie Ballard, director of media relations at LSU, said repayment schedules are placed with corresponding promissory notes in fireproof safes to comply with federal guidelines. Signed promissory notes were already stored in a fireproof safe, but related documents, including repayment schedules, were kept in a filing cabinet.

The report also found that LSU was mismanaging funds from the Higher Education Emergency Relief Fund, also known as HEERF. The audit revealed that the DLSU had received more than $40,000 which it was not eligible to receive.

The 40k was reimbursed to LSU for loss of income related to investment income, but it is not an eligible source of reimbursement under federal requirements.

LSU also incorrectly labeled other funds and failed to meet deadlines for publishing financial reports.

LSU said in a letter to the Legislative Auditor that they have refunded the $40,897 to the US Department of Education and are in the process of fixing the issue with fund categorization and reporting. These changes are expected to be completed by June 30.

Students will not see an increase in fees or tuition as a result of repayment of HEERF grant funds, according to Ballard.

The report found that the Pennington Biomedical Research Center “did not adequately monitor federal research and development cluster subrecipients.” They also found that Pennington had not completed some of the necessary audits on time.

The Pennington Biomedical Research Center is an autonomous institution within the LSU system. They conduct research on obesity, diabetes, cardiovascular disease, cancer and dementia.

Pennington violated federal regulations by failing to properly monitor subrecipients. According to the report, lack of proper maintenance can increase the likelihood of abusive payments. Such irregular payments may need to be returned to the Federal Licensor.

Pennington responded to the audit in a letter attached at the bottom of the report. They said they will strengthen controls over the tracking of sub-recipients. The response letter also stated that they would complete the required audit reports within the nine-month period.

Pennington said its new plan went into effect April 6.

Ballard said LSU was unaware of any of these issues until after the audit was completed.