An audit of LSU revealed issues in the handling of funds and student loans.
The Louisiana Legislative Auditor conducted their annual audit of the LSU system for the 2021 fiscal year. Auditor, Mike Waguespack, issued the report on May 23. One of the largest issues found was the inaccurate maintenance 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 were for inactive loans. Ninety-three percent of the active loan sample was not kept in fireproof safes, and one repayment schedule could not be found. Of the 40 inactive loan files, 13% did not include the proper paperwork.
LSU has responded to the findings of the report. According to the attached letter within the report, LSU is already in the process of amending the mishandling of loan files.
Ernie Ballard, director of Media Relations at LSU, said that repayment schedules are being placed with the matching promissory notes in fireproof safes to comply with federal guidelines. The signed promissory notes were already being stored in a fireproof safe, but the related documents, including the repayment schedules, were kept in a file cabinet.
The report also found that LSU incorrectly managed funds from the Higher Education Emergency Relief Fund, also known as HEERF. The audit found that LSU received over $40,000 that they were not eligible to receive.
The 40k was reimbursed to LSU for income loss related to investment income, but this is not an eligible source for reimbursement under the federal requirements.
LSU also incorrectly labeled other funds and did not comply with deadlines for publishing financial reports.
LSU said in a letter to the Legislative Auditor that they have refunded the $40,897 to the U.S. Department of Education, and they are in the process of addressing the issue with the categorization of funds and publishing of reports. These changes are expected to be completed by June 30.
Students will not see an increase in fees or tuition as a result of the repayment of HEERF grant funds, according to Ballard.
The report found that Pennington Biomedical Research Center “did not adequately monitor sub-recipients of the federal Research and Development cluster.” They also found that Pennington did not conduct some of the necessary audits within the required time frame.
The Pennington Biomedical Research Center is a stand-alone institution within the LSU system. They conduct research on obesity, diabetes, cardiovascular disease, cancer and dementia.
Pennington violated federal regulations by not monitoring sub-recipients properly. According to the report, the lack of proper maintenance can increase the likelihood of improper payments. These improper payments may need to be returned to the federal granter.
Pennington responded to the audit in a letter attached at the bottom of the report. They said they will strengthen controls over the monitoring of sub-recipients. The response letter also said they will complete the required audit reports within the nine-month time frame.
Pennington said their new plan went into effect April 6.
Ballard said LSU was unaware of any of these issues before the completion of the audit.