Question

You are auditing Pell grants provided to students at six state universities. The Pell grant program is a federal financial aid program for college students. The maximum grant a student can receive during a school year is $3,125, with a maximum of $1,041.67 per semester and summer session. The amount of a grant depends on financial need (need) and the number of credits taken (status). Students cannot receive a grant at two different schools during the same school term. You have obtained a file of grants for the current school year (available as Excel file pellA.XLS on the Blackboard site for the course ) that contains the following information:

SSN            Social Security number

Last            Student’s last name

First           Student’s first name

Middle       Student’s middle name or initial

School       School—coded 1 to 6

Term            Coded 1 to 3:

1—Fall Semester

2—Spring Semester

3—Summer Semester

Need*         Financial need—coded 1 to 5:

1: 100% of allowable grant

2: 75%

3: 50%

4: 25%

5: 0%

Status*      Credits taken—coded 1 to 4:

1: 100%     12 or more credits

2: 75%         9 to 11 credits

3: 50%        6 to 8 credits

4: 25%           3 to 5 credits

5: 0%             1 to 2 credits

Amount     Amount of grant for the term

Computation of grant: $3,125 / 3 * Need *Status

For a full-time student with maximum need:

$3,125 / 3 * 100% * 100% = $1,041.67

For a student with a code 3 need taking 9 credits:

$3,125 / 3 * 50% * 75% = $390.63

*Hint: To convert the NEED codes to the proper decimal value, use the expression: (1 - 0.25*(NEED − 1)). The same conversion can be used for STATUS codes.

1. Develop an audit program to identify potential fraud.

2. Use ACL to perform the steps in your audit program.

Your audit program to identify potential fraud.

A report on your findings including additional steps you would take to determine if fraud actually occurred.

Appropriate ACL printouts properly indexed with comments written on the printouts to explain the printout and its implications. Do not print out the entire grant file. Extract only the items of significance.

Answer 1

Answer 1:

Audit program:

The audit program of Pell grants which are provided to the six state university students is explained below:

Firstly, the procedures which are followed by the universities to assess the financial need of the students have to be assessed to determine whether it is appropriate. Since the object of Pell grants is to help the financially weaker students it is important to make sure that the grans are only given to the needy students.

Are the credit status of the students properly documented and checked at the time of sanction of grants? It is important to ensure that the grants are directly credited to the accounts of the students or their parents as the case may be in case the students are minor. This will reduce the chance of fraud to a huge extent.

The rotation of university staffs and other staffs engaged in the process of granting, sanctioning and payment of grants will reduce the chances of collation and fraud by the staffs.

All necessary documents in relation to the Pell grants shall be verified to ensure these are in order and there is nothing to arouse suspicion.

In case of any suspicion which is aroused then the double checks shall be used to determine the authenticity of grants.

Data analytics shall be used by using computer assisted auditing tools and techniques.

Answer 2:

1. The data shall be sorted on the basis of the student’s age, subjects, financial needs, credits taken.
2. All the data then verified against the supporting documents to check whether these are conformity with the terms and conditions of issuing grants to the students.
3. The amount of grants provided to students shall be crossed check with the bank statements of the students to endure that the grants have been issued and paid to the student properly.