Remington College's Use of Higher Education Emergency Relief Fund Student Aid and Institutional Grants (ED-OIG/A20CA0017)
Summary
Final audit report ED-OIG/A20CA0017 of the U.S. Department of Education Office of Inspector General, dated September 28, 2021, on Remington College's use of its Higher Education Emergency Relief Fund (HEERF) Student Aid and Institutional grants. It reports that the college generally used Student Aid funds for allowable and intended purposes but did not always use Institutional funds in accordance with Federal requirements, including $80,121 spent on multiyear software subscriptions and $64,985 that may have been improperly used for student computers. It also reports that the college did not always use a competitive procurement process for Institutional purchases over $10,000 and did not minimize the time between drawing down and spending its Institutional funds. Remington College stated that it agreed with Finding 1 and disagreed with Findings 2 and 3.
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- Issuer
- U.S. Department of Education, Office of Inspector General
- Document type
- Report
- Date
- 2021-09-28
Cite this document
“Remington College's Use of Higher Education Emergency Relief Fund Student Aid and Institutional Grants (ED-OIG/A20CA0017).”
U.S. Department of Education, Office of Inspector General, dated 2021-09-28. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/remington-college-heerf/
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U.S. Department of Education
Office of Inspector General
Remington College’s Use of
Higher Education Emergency
Relief Fund Student Aid and
Institutional Grants
September 28, 2021
ED-OIG/A20CA0017
ED OIG Oversight of Coronavirus Response Funds
NOTICE
Statements that managerial practices need improvements, as well as other conclusions
and recommendations in this report, represent the opinions of the Office of Inspector
General. The appropriate Department of Education officials will determine what
corrective actions should be taken.
In accordance with Freedom of Information Act (Title 5, United States Code,
Section 552), reports that the Office of Inspector General issues are available to
members of the press and general public to the extent information they contain is not
subject to exemptions in the Act.
UNITED STATES DEPARTMENT OF EDUCATION
OFFICE OF INSPECTOR GENERAL
Audit Services
September 28, 2021
Pam Bell
President
Remington College
7131 Business Park Lane
Lake Mary, FL 32746
Dear President Bell:
Enclosed is our final audit report, “Remington College’s Use of Higher Education Emergency Relief Fund
Student Aid and Institutional Grants,” Control Number ED-OIG/A20CA0017. This report incorporates the
comments you provided in response to the draft report. If you have any additional comments or
information that you believe may have a bearing on the resolution of this audit, you should send them
directly to the following Department of Education official, who will consider them before taking final
Departmental action on this audit:
Dr. Michelle Asha Cooper
Acting Assistant Secretary
Office of Postsecondary Education
400 Maryland Avenue, S.W.
Washington, DC 20202
The U.S. Department of Education’s policy is to expedite audit resolution by timely acting on findings
and recommendations. Therefore, if you have additional comments, we would appreciate receiving
them within 30 days.
Sincerely,
/s/
Daniel P. Schultz
Director of Pandemic Relief Audits
Enclosure
400 MARYLAND AVENUE, S.W., WASHINGTON, DC 20202-1510
Promoting the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Table of Contents
Results in Brief .................................................................................................................... 1
Introduction ........................................................................................................................ 6
Finding 1. Remington College Generally Used Student Aid Funds for Allowable and
Intended Purposes ............................................................................................................ 10
Finding 2. Remington College Did Not Always Use Institutional Grant Funds for Allowable
and Intended Purposes or Comply with Federal Procurement Requirements ................ 13
Finding 3. Remington College Did Not Follow Federal Cash Management Requirements
.......................................................................................................................................... 25
Appendix A. Scope and Methodology............................................................................... 32
Appendix B. Acronyms and Abbreviations........................................................................ 39
Remington College Comments ......................................................................................... 40
Results in Brief
What We Did
The objective of our audit was to determine if Remington College used the Student Aid
(Assistance Listing Number (ALN) 84.425E) and Institutional (ALN 84.425F) portions of its
Higher Education Emergency Relief Fund (HEERF) grant funds for allowable and intended
purposes. Our audit covered Remington College’s use of HEERF 1 funds from the grant
award date 2 through September 30, 2020. Because Remington College drew down but
did not expend all Institutional grant funds by September 30, 2020, we also included in
our review expenditures through December 31, 2020, that were paid for with
Institutional grant funds that the school had drawn down by September 30, 2020. Our
audit also covered Remington College’s cash management practices and reporting of
HEERF expenditures.
To achieve our audit objective, we interviewed Remington College officials responsible
for drawing down, managing, awarding, spending, and reporting on the school’s HEERF
grant funds. We also reviewed Remington College’s policies and procedures and other
documentation (for example, bank statements, invoices, student records) for managing,
authorizing, and accounting for HEERF-related transactions and expenditures.
Additionally, we reviewed a sample of Student Aid grant distributions and Institutional
grant expenditures to determine whether Remington College used the Student Aid and
Institutional portions of its HEERF funds for allowable and intended purposes. We also
compared the timing and amounts of drawdowns of HEERF funds with accounting
records (expenditure information) to determine whether Remington College minimized
the time between drawdown and disbursement of the funds. Lastly, we reviewed HEERF
reports that Remington College posted on its website covering expenditures from the
grant award date through September 30, 2020, for the Student Aid portion and through
December 31, 2020, for the Institutional portion. We reviewed the HEERF reports and
Remington College’s accounting records to determine whether the school reported
timely and quality information.
1
In this report, “HEERF” generally refers to both the Student Aid and Institutional grant funds. We use
“Student Aid” and “Institutional” when the information is specific to the respective grant.
2
The award date for Remington College’s Student Aid grant was April 25, 2020, and the award date for
its Institutional grant was May 5, 2020.
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What We Found
Remington College generally used the Student Aid portion of its HEERF grant funds for
allowable and intended purposes but did not always use the Institutional portion of its
funds in accordance with Federal requirements. We found that Remington College spent
Institutional funds for several unallowable purposes and did not always follow Federal
procurement and cash management requirements. Specifically, Remington College
• improperly used $80,121 of Institutional grant funds to purchase multiyear
software subscriptions that extend beyond the supplemental grant period;
• may have improperly used $64,985 of Institutional grant funds to cover costs
associated with its purchase of student computers; 3
• did not always use a competitive procurement process for Institutional grant
purchases over $10,000, contrary to Federal regulations; and
• did not minimize the time between drawing down and spending its Institutional
funds nor deposit excess HEERF funds (Student Aid and Institutional) in an
interest-bearing account, contrary to Federal regulations.
We also determined that the information in Remington College’s required HEERF
reports posted on its website was generally accurate, complete, and timely.
What We Recommend
We recommend that the Assistant Secretary for Postsecondary Education—
• Require Remington College to return to the U.S. Department of Education
(Department) the $80,121 in Institutional grant funds spent beyond the
supplemental Institutional grant period or reallocate the funds to other
allowable costs.
• Clarify whether the costs that Remington College initially charged to its
Institutional grant for student computers were allowable under the law and
existing guidance, and determine whether Remington College’s subsequent
3
As discussed in Finding 2, Department guidance regarding the use of Institutional grant funds under
HEERF suggests that if a school experienced “disruption of instruction” as a result of the coronavirus, the
school could charge the costs of computers purchased under existing practices to its HEERF grant. This
guidance appears to reflect a broader interpretation of allowable costs under the relevant part of the
statute.
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reallocation of costs for other expenses in the amount of $64,985
(corrective actions) was appropriate.
• Determine whether the $639,400 that Remington College charged to its
Institutional grant for contracts awarded without a competitive
procurement process was reasonable when compared to the quality and
costs of suitable alternatives, and if not, require appropriate corrective
actions.
• Require Remington College to ensure that school officials responsible for
making purchasing decisions receive sufficient training on Federal rules and
regulations related to grant administration and management.
• Require Remington College to incorporate Federal requirements related to
grant performance periods (allowable costs), procurements, and cash
management in its policies and procedures for managing HEERF grant funds.
• Determine whether Remington College accurately calculated interest and
ensure that the correct amount of interest is returned to the Federal
government in accordance with 2 Code of Federal Regulations (C.F.R.)
§ 200.305(b)(9).
Remington College Comments
We provided a draft of this report to Remington College for comment. We summarize
Remington College’s comments at the end of each finding and provide the full text of
the comments at the end of this report (see Remington College Comments).
Remington College stated that it agreed with Finding 1.
Remington College disagreed with Finding 2 and Recommendation 2.1, but it did not
explicitly agree or disagree with Recommendations 2.2–2.5. Remington College
disagreed with sub-finding, Subscriptions Extending Beyond Supplemental Grant
Performance Period, stating that the software was for the direct benefit of students and
supported the school’s transition in educational programming in response to the
coronavirus. Remington College disagreed with sub-finding, Student Computer
Purchases, stating that the increased cost of student laptops was attributable to a
significant change in the school’s delivery of instruction. Remington College disagreed
with sub-finding, Competitive Procurement Processes, stating that it was best for
students to have a seamless transition without months of delay from vetting, testing,
and negotiating with other vendors. Remington College acknowledged that it did solicit
bids and proposals before executing some contracts but noted that in some cases, no
responses were received from prospective vendors, and in other cases, the solution
options were so limited that comparable bids were unavailable. While it disagreed with
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Finding 2 and each of its sub-findings, Remington College described the corrective
actions it has taken in response to the recommendations related to the Student
Computer Purchases and Competitive Procurement Processes sub-findings
(Recommendations 2.2–2.5).
Remington College disagreed with Finding 3, stating that at the time it drew down the
Institutional grant funds (May 2020), the Department had advised schools to use the
funds expeditiously and its single draw of Institutional grant funds facilitated swift
administration of the funds. Remington College also said that the Department’s initial
cash management guidance was limited and did not mention the requirement that
schools limit the time between draw and expenditure of HEERF grant funds to 15 days.
While it disagreed with Finding 3, Remington College described the corrective actions it
has taken which include returning unexpended Institutional grant funds to the
Department, setting aside money to cover the interest that would have been earned on
those funds, updating its policies and procedures for managing Institutional grant funds
to include applicable cash management requirements, and setting up interest-bearing
accounts for its Institutional and Student Aid grant funds. Remington College also
agreed to remit interest earned more than $500 in accordance with 2 C.F.R.
§ 200.305(b).
Office of Inspector General Response
Regarding the Subscriptions Extending Beyond Supplemental Grant Performance Period
sub-finding under Finding 2, our report does not question the nature of the software
purchased or whether there may have been some benefits associated with the school’s
decision to purchase subscriptions for multiple years. However, as noted in this report,
Remington College must use non-HEERF grant funds to pay for subscription services
extending beyond the supplemental grant performance period ending May 19, 2022, to
comply with 2 C.F.R. § 200.309. To use HEERF funds beyond May 19, 2022, Remington
College would have to request a no-cost extension of the grant period and the
Department would have to determine that such an extension was appropriate under
2 C.F.R. § 200.308.
Regarding the Student Computer Purchases sub-finding under Finding 2, we questioned
whether Remington College used the Institutional grant funds to pay for expenses
related to a significant change in the delivery of instruction due to the coronavirus, as
required by Section 18004(c) of the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act). As noted in this report, Remington College’s purchase of student
computers was not an expense related to this change because it has been the school’s
practice, even before the national emergency was declared, to provide computers to
students when they enroll at the school. Because Remington College said that it had
refunded the $64,985 in increased computer purchase costs to the Department, we
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added a sentence in Finding 2 and modified Recommendation 2.2 to reflect the refund.
Regarding the Competitive Procurement Processes sub-finding under Finding 2, our
report does not question the school’s vendor selections for the six contracts identified in
this report. Rather, our report describes the Uniform Guidance general procurement
standards that all Federal grantees, including Remington College, must comply with. If
Remington College thought an exception to a competitive process under 2 C.F.R.
§ 200.320(f) applied, it should have requested a waiver from the Department.
Regarding Finding 3, we acknowledge that the Department strengthened its guidance
regarding cash management in its October 2020 Frequently Asked Questions document
and in the Grant Award Notification (GAN) for Coronavirus Response and Relief
Supplemental Appropriations Act and American Rescue Plan funds. However,
Enclosure 4 to the Student Aid and Institutional GANs for CARES Act funds described the
cash management requirements under 2 C.F.R. § 200.305(b) that Remington College
must follow. The requirements included minimizing the time between draw and
disbursement of grant funds and depositing those grant funds in an interest-bearing
account. In its comments, Remington College acknowledged that it should not have
drawn down the entire $6.7 million in May 2020.
We did not make any substantive changes to the findings based on Remington College’s
comments. As noted in our response above, we modified Recommendation 2.2 in
response to Remington College’s stated corrective action for the Student Computer
Purchases sub-finding. Remington College’s proposed actions, if implemented, are
responsive to Recommendations 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, and 3.3.
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Introduction
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted on
March 27, 2020, authorized more than $2 trillion to battle the coronavirus pandemic
and its economic effects. The CARES Act provided $31 billion for an Education
Stabilization Fund to prevent, prepare for, and respond to the coronavirus, domestically
or internationally, including $17 billion for State and local agencies and $14 billion for
the Higher Education Emergency Relief Fund (HEERF).
CARES Act Higher Education Emergency Relief Fund Grants
In Section 18004 of the CARES Act, Congress set aside $14 billion in HEERF funds to
mitigate the impact of the coronavirus on students and institutions of higher education.
Section 18004(a)(1) provided about $12.6 billion (90 percent) for direct grants to schools
to prevent, prepare for, and respond to the coronavirus. Of the remaining HEERF funds,
7.5 percent ($1 billion) was for formula grants to schools to address needs directly
related to coronavirus and another 2.5 percent ($349 million) was for schools that the
U.S. Department of Education (Department) determined had the greatest unmet needs
related to the coronavirus.
For direct grants, the Act required schools to distribute at least 50 percent of their
HEERF funds to students as emergency financial aid grants to help cover expenses
related to the disruption of campus operations due to the coronavirus. Schools could
use the remaining funds for additional emergency financial aid grants, or to cover any
costs associated with significant changes to the delivery of instruction due to the
coronavirus. The Department’s Office of Postsecondary Education (OPE) is responsible
for administering and overseeing these grants, which were awarded to more than
4,500 schools.
In April 2020, the Department allocated about $12.6 billion to schools as two separate
grants—50 percent of each school’s total authorization for emergency financial aid
grants to students under Assistance Listing Number (ALN) 84.425E (Student Aid portion),
and 50 percent for institutional costs under ALN 84.425F (Institutional portion). 4 In
addition to submitting an application, the Department required schools to sign separate
Certification and Agreement forms to access their Student Aid and Institutional grant
funds. Schools had 1 calendar year from the award date of each HEERF grant (Student
Aid and Institutional) to spend the funds unless the school received a no-cost extension.
The Department also required schools to report publicly on their use of HEERF funds by
4
Schools had to use the Student Aid portion only for emergency financial aid grants to students and
could use some or all of the Institutional portion for emergency financial aid grants to students.
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posting the required information on the school’s primary website on a quarterly basis.
The Institutional and Student Aid portions of HEERF funds are subject to Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards in 2 Code of Federal Regulations (C.F.R.) Part 200 (Uniform Guidance). 5 The
Uniform Guidance also addresses cash management requirements.
Additional Coronavirus Relief Legislation
After the CARES Act, Congress passed two additional coronavirus relief laws that
provided additional HEERF funding. The Coronavirus Response and Relief Supplemental
Appropriations Act (CRRSAA) was signed into law on December 27, 2020, authorizing an
additional $22.7 billion for schools under the HEERF programs. CRRSAA provided
additional flexibilities in how HEERF funds could be used, including for defraying
expenses associated with the coronavirus such as lost revenue, reimbursement for
expenses already incurred, technology costs associated with a transition to distance
education, faculty and staff trainings, and payroll. Additionally, section 314(d)(2) of
CRRSAA extended the allowable use provisions listed above to a school’s unspent CARES
Act funds.
On March 11, 2021, the American Rescue Plan (ARP) was signed into law, adding
$39.6 billion in additional HEERF funding. ARP and subsequent Department regulations
changed the eligibility requirements to allow institutions to provide emergency aid to
any individual who was enrolled at an eligible institution on or after March 13, 2020, the
date of the national emergency.
Remington College
The Department had allocated to Remington College a total of $72.1 million in
coronavirus relief funds by the conclusion of our fieldwork in May 2021. In April and
May of 2020, the Department awarded Remington College about $13.4 million in CARES
Act HEERF funds: $6.7 million (50 percent) for the Student Aid portion (ALN 84.425E)
and $6.7 million (50 percent) for the Institutional portion (ALN 84.425F). In January
2021, it was awarded an additional $21.6 million in HEERF funds under CRRSAA. In
5
The Office of Management and Budget's Uniform Guidance is an authoritative set of rules and
requirements for Federal awards that synthesizes and supersedes guidance from earlier Office of
Management and Budget circulars. It was officially implemented in December 2014 by the Council on
Financial Assistance Reform.
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May 2021, Remington College was awarded an additional $37.1 million in HEERF funds
under ARP. 6
Remington College is a nonprofit career college that offers programs in the fields of
business; graphic design; beauty and fitness; criminal justice; information technology;
healthcare; nursing; culinary arts; electronics; heating, ventilation, and air conditioning;
and engineering technology. These diploma and certificate programs typically take
between 8 to 24 months to complete. Each month, new students enroll in and existing
students graduate from these programs. Most students are enrolled in certificate
programs.
As of March 2020, Remington College had 14 campuses located in seven States
(Alabama, Arkansas, Louisiana, Ohio, South Carolina, Tennessee, and Texas). 7 Thirteen
of the campuses provided ground-based instruction; one campus provided only online
instruction. Remington College’s campuses are accredited by the Accrediting
Commission of Career Schools and Colleges.
Impact of Coronavirus
Before March 13, 2020, the date of the national emergency, all but one of Remington
College’s campuses provided in-person or blended (in-person and remote) instruction.
The remaining campus was an online only campus. In March 2020, Remington College
closed all ground-based campuses and transitioned classes from in person, hands-on
instruction to 100-percent online, remote instruction. According to Remington College
officials, the school made these changes to protect students and employees from the
coronavirus and encouraged its employees to work remotely. Remington College
officials told us that the school was able to transition most of its ground-based
instruction to 100-percent online, remote instruction by the end of March 2020 by
leveraging the online instruction capabilities of its existing online campus.
Remington College’s biggest challenge was converting hands-on laboratory classes to an
online, remote format. The school developed simulated laboratory classes, where
possible, but some laboratory courses required in-person, hands-on instruction. For
example, students enrolled in the dental hygiene program needed to train on a human
to satisfy graduation requirements.
6
CRRSAA and ARP authorized new HEERF funding to schools for the Student Aid and Institutional
portion. The Department allocated these funds under ALN 84.425Q. Our audit covered only the CARES
Act HEERF funds.
7
Remington College’s main administrative office is in Lake Mary, Florida.
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In August 2020, Remington College reopened its ground-based campuses for students
enrolled in laboratory courses that could not be converted to an online, remote format.
Remington College officials told us that the school will continue to provide blended
instruction after the coronavirus pandemic passes and that offering mostly online with
some ground-based laboratory instruction will be the ‘new normal’ for Remington
College.
Remington College’s total monthly enrollment before the national emergency
(January 2019–March 2020) averaged about 3,600 students. From April 2020–
January 2021 (first 10 months after the national emergency was declared), the school’s
total monthly enrollment averaged about 3,250 students, a decline of about
350 students when compared to average student enrollment before the national
emergency. 8 Figure 1 shows student enrollment at Remington College before and after
the national emergency was declared in March 2020, broken down by online, on-
campus, and total enrollment.
Figure 1. Remington College Student Enrollment, January 2019 through January 2021
SOURCE: Office of Inspector General Analysis of Remington College’s Enrollment Data
8
More than 90 percent of Remington College’s students are eligible to participate in programs under
Title IV of the Higher Education Act of 1965.
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Finding 1. Remington College Generally Used
Student Aid Funds for Allowable and Intended
Purposes
Remington College generally used the Student Aid portion of its HEERF grant funds for
allowable and intended purposes. As of September 30, 2020, Remington College had
awarded 2,214 emergency financial aid grants to students totaling approximately
$4.1 million (61 percent) of the $6.7 million in Student Aid grant funds it was awarded
under the CARES Act. We reviewed documents and records (such as student enrollment
agreements, grant applications, and student information records) from the school’s
student financial aid system for 30 (1.4 percent) of the 2,214 grants and determined
that all 30 students were eligible to receive the grants and were issued checks from
Remington College. 9 However, as discussed in Finding 3, Remington College did not
deposit Student Aid grant funds in an interest-bearing account in accordance with
Federal cash management requirements.
We reviewed three HEERF reports (initial, 45-day, and quarterly) that Remington College
posted on its website for the Student Aid portion and determined that the information
in those reports was generally accurate, complete, and timely.
How Remington College Awarded and Distributed Student Aid
Grant Funds
Congress intended for Student Aid grant funds to provide students emergency financial
relief for expenses related to the disruption of campus operations, including students’
cost of attendance, such as food, housing, course materials, technology, health care,
and childcare. The Department directed schools to award emergency financial aid grants
only to students who were or could be eligible to participate in Title IV of the Higher
Education Act of 1965 (Title IV) programs (Title IV-eligible). 10, 11 Schools had discretion in
9
The results from our testing pertain only to the students included in our review and should not be
projected to the entire universe of students who received Student Aid grant funds. Because no
exceptions were identified, we determined that no further testing was needed.
10
To be eligible for Title IV funds, a student must satisfy several eligibility requirements. Those
requirements, in part, include being a U.S. citizen or eligible noncitizen, being enrolled as a student in an
eligible program at an eligible school, maintaining satisfactory academic progress, not being in default
on a Title IV loan, and registering for Selective Service if required.
11
In May 2021, Department regulations subsequently changed the eligibility criteria so that students no
longer had to be Title IV-eligible to receive an emergency financial aid grant.
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determining the amount of individual emergency financial aid grants and how to
distribute the funds to students.
Remington College’s policy was to distribute emergency financial aid grants in the
amount of $1,850 to existing students (1) for whom the school had an Institutional
Student Information Record (ISIR) from the Department on file and (2) who the school
determined to be Title IV-eligible. 12 Remington College considered factors such as
expected student enrollment and the grant performance period end date when it
settled on the $1,850 grant award for each student. School officials told us that the
school wanted to ensure that all Student Aid grant funds would be distributed by the
end of the grant performance period.
Remington College’s policy was to verify students’ Title IV eligibility, in part, by
confirming that students (1) were enrolled or accepted for enrollment in a degree or
certificate program, (2) currently enrolled were making satisfactory academic progress,
(3) did not owe an overpayment on Title IV grants or loans, (4) were not in default on a
Title IV loan, (5) did not fraudulently receive Title IV loans in excess of annual or
aggregate limits, (6) had a valid social security number, (7) signed up for selective
service if required, and (8) were a U.S. citizen or eligible noncitizen.
Students with an ISIR on file did not automatically receive a Student Aid grant.
Remington College required students with an ISIR to apply for the grant and identify in
their application the financial hardships they were experiencing due to the coronavirus,
including hardships related to food, housing, course materials, technology, healthcare,
and childcare. Remington College only allowed students who were enrolled at a ground-
based campus and had an ISIR on file to apply for a Student Aid grant. 13 Figure 2 on the
following page provides an overview of the Student Aid grant application process at
Remington College.
12
The ISIR contains information the student reported on the Free Application for Federal Student Aid
(FAFSA) form, which includes information for determining Title IV eligibility.
13
Students enrolled at Remington College’s online campus (100-percent distance education students)
could not apply.
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Figure 2. Student Aid Grant Application Process at Remington College
Remington College Comments
Remington College stated that it agreed with the finding. Because this was a positive
finding, the OIG did not issue any recommendations.
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Finding 2. Remington College Did Not Always Use
Institutional Grant Funds for Allowable and
Intended Purposes or Comply with Federal
Procurement Requirements
Remington College improperly used $80,121 of its Institutional grant funds to purchase
multiyear software subscriptions that extend beyond the supplemental grant
performance period and may have improperly used an additional $64,985 to cover costs
associated with its purchase of student computers. These funds could have been used
by Remington College for other purposes or by other schools if Remington College did
not need the funds and had returned them to the Department. We also found that
Remington College did not always use a competitive procurement process for
Institutional grant purchases over $10,000, contrary to the Federal procurement
standards at 2 C.F.R. §§ 200.318 to 200.320. In addition, as discussed in Finding 3,
Remington College did not manage its Institutional grant funds in accordance with
Federal cash management requirements.
We reviewed two HEERF reports that Remington College posted on its website for the
Institutional portion and determined that the information in those reports was generally
accurate, complete, and timely.
How Remington College Used Institutional Grant Funds
Under the CARES Act, Congress intended for schools to use Institutional grant funds to
cover any costs associated with significant changes to the delivery of instruction due to
coronavirus. In deciding how to use its Institutional grant funds, Remington College’s
Provost stated that the school’s spending decisions were driven by its desire to protect
students and staff from the spread of the coronavirus and to convert as much ground-
based instruction to distance learning as possible. To help decide what costs might be
allowable for reimbursement under the grant, Remington College’s Chief Financial
Officer (CFO) told us that officials making the spending decisions consulted with the
school’s executive committee (composed of senior managers and General Counsel) and
external counsel.
Of the $1.2 million spent as of December 31, 2020, Remington College reported using
84 percent for expenditures related to software for online instruction and library
services; updates to online curricula and training in online instruction; additional
instructional equipment; and computers for faculty, staff, and students; as shown in
Table 1 on the following page. Remington College officials told us that the school used
these funds, in part, to purchase software subscriptions to enhance distance learning
capability and capacity and convert in-person courses and laboratory classes to online
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instruction. Remington College also reported using the remaining 16 percent for
expenditures related to campus safety and cleaning, such as personal protection
equipment, enhanced cleaning services, and portable and permanent air purification
systems to improve air quality at school facilities.
Table 1. Remington College’s Institutional Expenditures through December 31, 2020
Category of Expenditure Amount Percent of Total
Software for Online Classes, Virtual Laboratory Classes,
$625,408 51.2%
and Library Services
Computers for Faculty, Staff, and Students $298,614 24.4%
Updating Online Class Curricula and Training in Online
$68,805 5.6%
Instruction
Additional Instructional Equipment $33,860 2.8%
Campus Safety and Cleaning $195,163 16.0%
Total $1,221,850 100%
SOURCE: Office of Inspector General analysis of Remington College’s quarterly Institutional
expenditure reports posted on its website for the periods ended September 30 and December 31,
2020.
Remington College Improperly Used Institutional Grant Funds
for Subscriptions that Extend beyond the Supplemental Grant
Performance Period
Remington College used $564,479 of its initial CARES Act Institutional grant funds to
purchase multiyear subscriptions (2- and 3-year subscriptions) from six vendors for
various online learning systems and online library resources. At the time of the
purchase, which was before Remington College was awarded supplemental Institutional
grant funds under CRRSAA and ARP, $338,161 of the subscription costs extended
beyond the initial Institutional grant performance period which ended May 4, 2021, and
were thus unallowable. 14
14
According to 2 C.F.R. § 200.404, a cost is reasonable if, in its nature and amount, it does not exceed
that which would be incurred by a prudent person under the circumstances prevailing at the time the
decision was made to incur the cost.
U.S. Department of Education
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ED-OIG/A20CA0017 14
Remington College was later awarded supplemental Institutional grant funds under
CRRSAA and ARP, which extended the Institutional grant performance period end date
for all Institutional grant funds awarded under the CARES Act, CRRSAA, and ARP to
May 19, 2022. The Department’s extension of the Institutional grant performance
period reduced the amount of excessive subscription costs that Remington College
improperly prepaid. As shown in Table 2, Remington College still improperly used
$80,121 of Institutional grant funds for subscriptions that extend beyond the
supplemental Institutional grant performance period ending May 19, 2022. According to
cost principles specified in Uniform Guidance at 2 C.F.R. § 200.309, “a non-Federal entity
may charge to the Federal award only allowable costs incurred during the period of
performance….” Thus, Remington College should not have used Institutional grant funds
to prepay costs that would be incurred after May 19, 2022.
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Table 2. Subscriptions Extending Beyond Remington College’s Initial and Supplemental
Institutional Grant Performance Periods
Amounts Extending
Total Amounts Extending
Subscription beyond May 19,
Vendor Subscription Subscription beyond May 4,
Period 2022 (supplemental
Amount 2021 (initial grant)
grant)
Online training 08/2020–
Vendor
for skilled 07/2022 $152,900 $84,608 $11,825
1
trades (2 years)
Online tutoring
08/2020–
Vendor and simulated
07/2022 $292,600 $170,683 $24,383
2 learning for
(2 years)
students
Access to 09/2020–
Vendor
academic 08/2023 $11,438 $8,625 $4,875
3
videos (3 years)
Online
09/2020–
Vendor instruction
08/2023 $30,000 $20,625 $10,375
4 resources for
(3 years)
faculty
Hotel and
09/2020–
Vendor restaurant
08/2023 $32,000 $24,000 $13,333
5 management
(3 years)
simulations
09/2020–
Vendor Online library
08/2023 $45,541 $29,620 $15,330
6 resources
(3 years)
Total - - $564,479 $338,161 $80,121
SOURCE: Office of Inspector General analysis of Remington College’s expenditure data.
Remington College had the option to purchase 1-year subscriptions from the vendors
but instead chose to purchase multiyear subscriptions. Remington College’s CFO told us
that the school purchased multiyear subscriptions because the annual cost was lower
when compared to the 1-year price and the school wanted students enrolled in its
18-month associates degree program to have access to the online resources throughout
their program. However, to comply with 2 C.F.R. § 200.309, Remington College should
have charged to the Institutional grant only those subscription costs through May 19,
2022. Subscription costs after that date should be paid for with other (non-HEERF)
school funds.
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Remington College’s policies and procedures for managing the HEERF grants did not
incorporate Federal requirements limiting grant charges to allowable costs incurred
during the grant performance period. Further, Remington College had only limited
experience administering Federal grants before receiving Institutional grant funds. 15 By
charging the full cost of the multiyear subscriptions to the grant, Remington College
officials did not apply the applicable cost principles contained in Uniform Guidance.
Remington College officials told us that the guidance provided by OPE was not timely
and sometimes difficult to understand. Going forward, we strongly encourage
Remington College to reach out to OPE for guidance and technical assistance when it
has questions regarding allowable uses of Institutional grant funds. Remington College’s
limited experience administering Federal grants and the nature of the Institutional grant
(for example, a new grant with expedited implementation timeframes) likely
contributed to the school’s noncompliance in this area. It is critical that grantees not
prepay costs that extend beyond the grant performance period. Properly allocating
costs to the grant performance period protects taxpayer dollars; minimizes the risk of
fraud, waste, and abuse; and ensures that Federal funds are used for allowable and
intended purposes.
Remington College May Have Improperly Used Institutional
Grant Funds for Costs Related to Student Computer Purchases
Remington College may have improperly used $64,985 of its Institutional grant funds to
cover costs associated with its purchase of student computers. Remington College’s
practice has been to provide all students with a laptop computer when they enroll at
the school. 16 This practice was in place before March 2020, when the national
emergency was declared, and continued during our fieldwork. According to Remington
College’s CFO, the national emergency negatively impacted the availability and price of
laptop computers. Remington College ultimately purchased 772 computers for students
during the audit period that were a different model and about $84 more expensive (per
computer) than those purchased before March 2020. In response, Remington College
charged $64,985 to the Institutional grant to cover the increased computer purchase
costs.
According to Section 18004(c) of the CARES Act, Institutional grant funds must be used
for expenses related to a significant change in the delivery of instruction due to the
15
The Student Aid and Institutional grants are the only non-Title IV, direct grants that Remington College
currently receives from Federal agencies.
16
The laptop computers become the property of the students when they enroll and are not owned by
the school.
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ED-OIG/A20CA0017 17
coronavirus. As noted in the Introduction section of this report, Remington College
closed all ground-based campuses in March 2020 and transitioned classes from in
person, hands-on instruction to 100-percent online, remote instruction—a significant
change in the delivery of instruction due to the coronavirus. The purchase of student
computers, though, was not an expense related to this change because it has been the
school’s practice, even before the national emergency was declared, to provide
computers to students when they enroll at the school.
However, we noted that Department guidance issued in June 2020 regarding the use of
funds under HEERF suggests that, if a school experienced “disruption of instruction” as a
result of the coronavirus, it could charge the costs of additional computers purchased to
accommodate the student body’s transition to online learning as well as the costs of
computers that the school usually purchases. 17 This guidance appears to reflect a
broader interpretation of allowable costs under the relevant part of the statute.
Remington College officials generally viewed all increased costs due to the national
emergency as allowable costs that could be charged to the grant and did not consider
whether the computer costs charged to its Institutional grant were for expenses
specifically related to a significant change in the delivery of instruction due to the
coronavirus. The Department’s guidance, which is seemingly more permissive in terms
of allowable costs than the statute itself, impacts our ability to assess whether the
school improperly used $64,985 of its Institutional grant funds for this purpose. In its
response to the draft of this report, Remington College stated that it refunded the
computer costs by reducing the disbursements it received from the Department in April
and May 2021 for other allowable expenses in the amount of $64,985. However, we did
not assess the appropriateness of Remington College’s subsequent reallocation of costs
for other expenses.
Remington Did Not Always Use Competitive Procurement
Processes
Remington College did not always use a competitive procurement process for
Institutional grant purchases over $10,000. The Uniform Guidance general procurement
standards at 2 C.F.R. §§ 200.318 to 200.320. require competitive processes for selecting
vendors when purchases are over $10,000 (micro-purchase threshold). For purchases
between $10,000 and $250,000 (simplified acquisition threshold), the procurement
standards require that price or rate quotations be obtained from an adequate number
of qualified sources as determined by the grantee (school). Formal procurement
17
Supplemental Frequently Asked Questions under Section 18004 of the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, June 30, 2020. Question 9 addresses purchases of student computers.
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ED-OIG/A20CA0017 18
methods, which include publicly soliciting prices from prospective vendors, are required
for purchases over $250,000. All procurement transactions for acquiring property or
services must be conducted in a manner providing full and open competition consistent
with the procurement standards.
Contrary to 2 C.F.R. §§ 200.318 to 200.320, Remington College did not use competitive
procurement processes to select vendors for six service contracts that exceeded
$10,000. The total cost of these contracts was $639,400, with contracts ranging from
$30,000 to $292,600. As of December 31, 2020, the school had charged $388,598
(61 percent) to the Institutional grant for services provided under these contracts that
should have but did not go through a competitive procurement process before they
were purchased. Rather than using competitive procurement processes, Remington
College selected these vendors based on input from school officials (including faculty)
and prior business experience with these vendors, as shown in Table 3.
Table 3. Contracts for Which a Competitive Procurement Process Was Not Used and
Remington College’s Reasons for Selecting the Vendors
Contract Description of Contract Total Contract
Reason(s) Why Vendor was Selected
Number Services Amount
Online tutoring and Per the school's Provost, the new
Contract 1 simulated learning for $292,600 vendor's services were more robust than
students. the previous vendor's services.
Online instruction Per the school's Provost, the faculty
Contract 2 $30,000
resources for faculty. preferred the new vendor's resources.
Hybrid course The school has maintained a long-term
Contract 3 development for $79,200 relationship with this vendor and is
Cosmetology program. satisfied with the vendor's work.
Hybrid course The school has maintained a long-term
Contract 4 development for HVAC $79,200 relationship with this vendor and is
program. satisfied with the vendor's work.
Hybrid course The school has maintained a long-term
Contract 5 development for Medical $79,200 relationship with this vendor and is
Assistant program. satisfied with the vendor's work.
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Contract Description of Contract Total Contract
Reason(s) Why Vendor was Selected
Number Services Amount
Hybrid course The school has maintained a long-term
Contract 6 development for Facility $79,200 relationship with this vendor and is
Maintenance program. satisfied with the vendor's work.
Total - $639,400 -
SOURCE: Office of Inspector General analysis of Remington College’s expenditure data and the
school’s CFO.
Contrary to the Uniform Guidance general procurement standards, Remington College
did not use a formal procurement process for Contract 1 or obtain price or rate
quotations from an adequate number of qualified vendors for Contracts 2–6. There are
exceptions to a competitive procurement process available under 2 C.F.R. § 200.320(f),
which in part include exceptions if the item is available only from a single source or if
the public exigency or emergency for the requirement will not permit a delay resulting
from competitive solicitation. However, none of the exceptions to a competitive
procurement process available under 2 C.F.R. § 200.320(f) applied to these contracts.
There were other vendors available to provide similar services or resources (not a sole-
source situation) and the contracts were executed in the latter part of 2020. Because
the contracts were executed 6–9 months after the coronavirus pandemic began,
Remington College should have had sufficient time to use a competitive procurement
process for these contracts.
Remington College’s policies and procedures for managing the HEERF grants did not
incorporate Federal procurement requirements related to using competitive processes
for selecting vendors when purchases are over $10,000, obtaining price or rate
quotations from an adequate number of qualified vendors for purchases between
$10,000 and $250,000, and using formal procurement methods for purchases over
$250,000. Additionally, as previously discussed, Remington College had only limited
experience administering Federal grants before receiving Institutional grant funds. By
not using competitive procurement processes for Institutional grant purchases
exceeding $10,000, Remington College officials did not apply the general procurement
standards and requirements contained in Uniform Guidance. While Remington College
may have had reasons for selecting vendors based on previous experience and
employee feedback, it is critical that Federal grantees such as Remington College use
and document a competitive procurement process when required to do so by Federal
law or regulation. 2 C.F.R. § 200.404 states that a cost is reasonable if, in its nature and
amount, it does not exceed that which would be incurred by a prudent person under the
circumstances prevailing at the time the decision was made to incur the cost. When
determining the reasonableness of a cost, a grantee must, in part, consider the market
U.S. Department of Education
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ED-OIG/A20CA0017 20
prices for comparable goods or services. A competitive procurement process helps
ensure that grantees do not overpay for large purchases and receive goods and services
of sufficient quality. Without a competitive process, Remington College (and by
extension, taxpayers) might be paying more for the same goods and services or
receiving goods and services of inferior quality when compared to other vendors.
Recommendations
We recommend that the Assistant Secretary for Postsecondary Education—
2.1 Require Remington College to return to the Department the $80,121 in
Institutional grant funds spent beyond the supplemental Institutional grant
period or reallocate the funds to other allowable costs.
2.2 Clarify whether the costs that Remington College initially charged to its
Institutional grant for student computers were allowable under the law and
existing guidance, and determine whether Remington College’s subsequent
reallocation of costs for other expenses in the amount of $64,985 (corrective
actions) was appropriate.
2.3 Determine whether the $639,400 that Remington College charged to its
Institutional grant for contracts awarded without a competitive procurement
process was reasonable when compared to the quality and costs of suitable
alternatives, and if not, require appropriate corrective actions.
2.4 Require Remington College to incorporate in its policies and procedures for
managing HEERF grant funds the Federal requirements related to charging only
allowable costs during the grant performance period, using competitive
processes for selecting vendors when purchases are over $10,000, obtaining
price or rate quotations from an adequate number of qualified vendors for
purchases between $10,000 and $250,000, and using formal procurement
methods for purchases over $250,000.
2.5 Require Remington College to ensure that school officials responsible for making
purchasing decisions receive sufficient training on Federal rules and regulations
related to grant administration and management.
Remington College Comments
Remington College disagreed with the finding and the recommendation that it return to
the Department, or reallocate to other allowable costs, the $80,121 in Institutional
grant funds spent beyond the supplemental Institutional grant period
(Recommendation 2.1). Remington College did not explicitly state whether it agreed or
U.S. Department of Education
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ED-OIG/A20CA0017 21
disagreed with the other recommendations, but it took corrective actions in response to
them, where applicable.
Remington College disagreed with sub-finding, Subscriptions Extending Beyond
Supplemental Grant Performance Period, stating that the software was for the direct
benefit of students and supported the school’s transition in educational programming in
response to the coronavirus. Remington College said that it decided to sign software
agreements for multiple years, in part, because that approach was more cost effective.
The school further stated that if it had secured the software for only 1 year, students
enrolling in programs at that time might not have had access to the software for the
duration of their program. Remington College noted that the 2- and 3-year subscriptions
ensured that most students enrolling within the first year would be able to access the
software for the duration of their 24-month associate degree programs. For these
reasons, Remington College disagreed with Recommendation 2.1.
Remington College disagreed with sub-finding, Student Computer Purchases, stating
that the increased cost of student laptops was attributable to a significant change in the
school’s delivery of instruction. Remington College said that the higher computer costs
were due to supply chain interruptions, material shortages, and high demand for
computers caused by the coronavirus. It further stated that computer prices increased
because there were so many schools requesting computers at the same time and
because most computer parts originated from China. Remington College also noted that
Department guidance indicated that schools could use HEERF grant funds for pre-
planned technology costs. While it disagreed with the sub-finding, Remington College
took the corrective action of refunding the computer costs by reducing the
disbursements it received from the Department in April and May 2021 for other
allowable expenses of $64,985.
Remington College disagreed with sub-finding, Competitive Procurement Processes,
stating that it was best for students to have a seamless transition without months of
delay from vetting, testing, and negotiating with other vendors. Remington College
noted that its primary vendor (the vendor for Contracts 3–6 in Table 3 of the report)
maintains the school’s student portal and website and has been the exclusive provider
of the school’s online learning programs since 2017. The school said that moving to
another vendor was not in the best interest of the students or the school. Remington
College said that it did solicit bids and proposals before executing the other contracts
(Contracts 1–2 in Table 3). However, the school noted that in some cases, no responses
were received from prospective vendors, and in other cases, the solution options were
so limited that comparable bids were unavailable. Remington College also noted that
Department guidance regarding application of Uniform Guidance and competitive
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bidding was limited until recently, citing the March 2021 issuance of the HEERF audit
guide to support that clear guidance was only recently provided.
While it disagreed with the sub-finding, Remington College said that it welcomes the
opportunity to prove to the Department that the $639,400 in contracts awarded
without a competitive procurement process was reasonable. It also said that it took
corrective action by incorporating the Federal procurement requirements into its
policies and procedures for managing HEERF grant funds and purchasing training
seminars on government grant administration and management for school personnel
responsible for making purchasing decisions (training to be completed by August 15,
2021).
Office of Inspector General Response
Regarding the Subscriptions Extending Beyond Supplemental Grant Performance Period
sub-finding, our report does not question the of the software purchased or whether
there may have been some benefits associated with the school’s decision to purchase
subscriptions for multiple years. However, as noted in this report, Remington College
must use non-HEERF grant funds to pay for subscription services extending beyond the
supplemental grant performance period ending May 19, 2022, to comply with 2 C.F.R. §
200.309. To use HEERF funds beyond May 19, 2022, Remington College would have to
request a no-cost extension of the grant period and the Department would have to
determine that such an extension was appropriate under 2 C.F.R. § 200.308.
Regarding the Student Computer Purchases sub-finding, our report does not opine on
the cause of the higher prices that Remington College paid for student computers. The
sub-finding questioned whether Remington College used the Institutional grant funds to
pay for expenses related to a significant change in the delivery of instruction due to the
coronavirus, as required by Section 18004(c) of the CARES Act. As noted in this report,
Remington College’s purchase of student computers was not an expense related to this
change because it has been the school’s practice, even before the national emergency
was declared, to provide computers to students when they enroll at the school. Our
report acknowledges that Department guidance issued in June 2020 regarding the use
of funds under HEERF suggests that, if a school experienced “disruption of instruction”
because of the coronavirus, it could charge the costs of additional computers purchased
to accommodate the student body’s transition to online learning as well as the costs of
computers that the school usually purchases. This guidance appears to reflect a broader
interpretation of allowable costs than Section 18004(c) of the CARES Act. Because
Remington College said that it had refunded the $64,985 in increased computer
purchase costs to the Department, we added a sentence in Finding 2 and modified
Recommendation 2.2 to reflect the refund.
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Regarding the Competitive Procurement Processes sub-finding, our report does not
question the school’s vendor selections for the six contracts identified in this report.
Rather, our report describes the Uniform Guidance general procurement standards that
all Federal grantees, including Remington College, must comply with. As noted in this
report, there are exceptions to a competitive procurement process available under
2 C.F.R. § 200.320(f), which in part include exceptions if the item is available only from a
single source or if the public exigency or emergency for the requirement will not permit
a delay resulting from competitive solicitation. If Remington College thought an
exception applied for these contracts, it should have requested a waiver from the
Department. Because the contracts were executed 6 to 9 months after the coronavirus
pandemic began, Remington College should have had sufficient time to either use a
competitive procurement process for these contracts or request a waiver from the
Department.
We did not make any substantive changes to the finding based on Remington College’s
comments. As noted in our response above, we added a sentence describing the
corrective action that Remington College said it took in response to the Student
Computer Purchases sub-finding and modified Recommendation 2.2 in response to
Remington College’s stated corrective action for that sub-finding. Remington College’s
proposed actions, if implemented, are responsive to Recommendations 2.2, 2.3, 2.4,
and 2.5.
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ED-OIG/A20CA0017 24
Finding 3. Remington College Did Not Follow
Federal Cash Management Requirements
Remington College did not minimize the time between drawing down and spending its
Institutional grants funds or deposit its excess HEERF funds (Student Aid and
Institutional) in an interest-bearing account, as required by Federal cash management
regulations. Remington College officials did not demonstrate an understanding of, and
generally lacked policies and procedures to ensure compliance with, the cash
management requirements.
Federal regulations at 2 C.F.R. § 200.305(b) state that non-Federal entities such as
Remington College “must minimize the time elapsing between the transfer of funds
from [the Department] and the disbursement by the non-Federal entity ….” The
regulations further state that advance payments must be limited to actual cash
requirements for approved purposes, that these payments must be held in interest-
bearing accounts, and that up to $500 earned interest per year may be retained by the
non-Federal entity for administrative expenses. Any additional interest earned on
Federal advance payments deposited in interest-bearing accounts must be remitted to
the Department of Health and Human Services Payment Management System.
According to Remington College’s CFO, the school did not follow Federal cash
management requirements set forth in 2 C.F.R. § 200.305(b) because school officials had
not received specific cash management guidance from the Department before the
school drew down its HEERF funds. Remington College officials stated that they were
unaware of the Federal cash management requirements until we brought it to the
school’s attention in January 2021 as part of our audit. 18 However, when signing the
respective Recipient’s Funding Certification and Agreement in April 2020 to access its
Student Aid and Institutional grant funds, Remington College certified that it would
comply with 2 C.F.R. Part 200. Enclosure 4 of the GAN for the Student Aid and
Institutional grants, respectively dated in April and May 2020, also reminded grantees of
existing cash management requirements in 2 C.F.R. Part 200 and described the
requirements in detail. Further, OPE provided specific guidance regarding Federal cash
management requirements in a Frequently Asked Questions (FAQ) document that it
issued in October 2020, which was about 3 months before we informed Remington
18
In January 2021, we informed Remington College that it was not complying with applicable Federal
cash management requirements and explained that that all Federal funds, including HEERF funds, should
be maintained in an interest-bearing account and should only be drawn down based on a grantee’s
immediate needs.
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College that it was not complying with Federal cash management requirements. 19
Additionally, Remington College has been a long-time participant in the Title IV Federal
student aid programs, which are subject to similar cash management
requirements. Even though school officials had limited experience administering Federal
grants, they were made aware of, agreed to comply with, and should have ensured
compliance with Federal cash management requirements.
Nevertheless, Remington College’s policies and procedures for managing the HEERF
grants did not incorporate Federal cash management requirements related to
minimizing the time between drawing down and spending its Institutional grant funds,
maintaining HEERF funds (Student Aid and Institutional) in an interest-bearing account,
or remitting interest earned in excess of $500 to the Federal government. Remington
College’s policy for managing its Student Aid grant funds required that funds be
distributed within 3 days of receipt but did not require the school to deposit funds in an
interest-bearing account or remit excess interest earned. Remington College’s policy for
managing Institutional grant funds was generally limited to ensuring that Institutional
grant funds were deposited in a separate bank account to provide accurate accounting
to the Department and were used for allowable purposes under the CARES Act. Upon
learning of its noncompliance with cash management requirements in January 2021,
Remington College took the following corrective actions:
• Returned to the Department $5.5 million in Institutional grant funds that it had
drawn down in May 2020 but had not spent as of January 2021;
• Deposited $25,000 in Institutional grant funds, which were needed to pay
outstanding obligations, in a business checking account that earns interest; and
• Deposited $1,876 in school funds (non-HEERF funds) into the business checking
account where its Institutional grant funds are held. This amount represented
Remington College’s estimate of imputed interest that the school would have
earned if it had deposited Institutional grant funds in an interest-bearing
account from the start.
Remington College Did Not Minimize the Time Between
Drawing Down and Spending Institutional Grant Funds
Remington College drew down all of its Institutional grant funds in advance of
immediate cash needs and, thus, did not minimize the time between drawing down and
spending the funds. The Department authorized $6,704,434 in Institutional grant funds
Higher Education Emergency Relief Fund (HEERF) Frequently Asked Questions (FAQ) Rollup Document,
19
October 14, 2020. Question 9 addresses Federal cash management requirements.
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ED-OIG/A20CA0017 26
for Remington College on May 5, 2020, and Remington College drew down all the funds
on May 19, 2020. Remington College did not have an immediate cash need for all the
drawn funds, as discussed below, and, thus, did not comply with 2 C.F.R.
§ 200.305(b)(1).
As shown in Table 4, Remington College did not begin to spend its Institutional grant
funds until June 8, 2020, and by December 31, 2020, had spent only $1.1 million
(17 percent) in Institutional grant funds. As noted above, Remington College returned to
the Department $5.5 million in Institutional grant funds that it had drawn down in
May 2020 but had not spent as of January 2021.
Table 4. Drawdown and Spending Activity for Remington College’s Institutional Grant
Funds, May 19 through December 31, 2020
Drawdown and Remaining Percent of Drawn Number of Days
Date (Spending) Institutional Funds Spent Elapsed from
Amounts Grant Funds (Cumulative) May 19, 2020
May 19, 2020 $6,704,434 $6,704,434 0 0
June 8, 2020 (18,676) 6,685,758 0.3% 20
July 9, 2020 (12,216) 6,673,541 0.5% 51
August 13, 2020 (15,645) 6,657,896 0.7% 86
August 17, 2020 (152,900) 6,504,996 3.0% 90
August 27, 2020 (292,600) 6,212,396 7.3% 100
September 10, 2020 (48,207) 6,164,189 8.1% 114
September 17, 2020 (115,302) 6,048,888 9.8% 121
October 8, 2020 (213,000) 5,835,887 13.0% 142
October 28, 2020 (48,874) 5,787,013 13.7% 162
November 6, 2020 (151,215) 5,635,798 15.9% 171
December 4, 2020 (58,800) 5,576,998 16.8% 199
December 31, 2020 0 5,576,998 16.8% 226
SOURCE: Office of Inspector General Analysis of Remington College’s drawdowns and spending,
as recorded in the Department’s G5 system and the school’s bank statements.
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ED-OIG/A20CA0017 27
Student Aid Grant Funds. Remington College minimized the time between drawing
down and disbursing of its Student Aid grant funds in accordance with Federal cash
management requirements and school policy. 20 However, it had to void and reissue
21 of the 2,214 checks it sent to students because the students either did not receive
the first check or did not deposit the check timely. The Student Aid funds for those
21 students were maintained in a noninterest-bearing account anywhere from 1 to
21 days after the school drew down the funds. Interest could have been earned on
those funds if they had been held in an interest-bearing account and thus would have
increased the amount of total interest that Remington College earned on all Federal
funds (Student Aid and Institutional) and the amount that the school should remit to the
Federal government.
Remington College Did Not Maintain Student Aid and
Institutional Grant Funds in Interest-Bearing Accounts
Upon drawing down its Student Aid and Institutional grant funds from the Department,
Remington College maintained the funds in noninterest-bearing bank accounts. After we
informed Remington College that Federal funds should be maintained in an interest-
bearing account unless certain conditions apply, it established and deposited its
Institutional grant funds in an interest-bearing bank account. According to Remington
College’s CFO, the school still uses a noninterest-bearing account for its Student Aid
grant funds because the costs of establishing and using an interest-bearing account (for
example, account fees, or costs for checks and establishing new parameters in the
accounting system) would offset any interest earned. The CFO also told us that any
interest earned on the Student Aid funds would have been small and less than
$500 annually. However, the $500 annual interest threshold applies to interest earned
on all Federal grant funds, not individual Federal grants. If Remington College had
deposited its Student Aid and Institutional grant funds in interest-bearing accounts, it
likely would have earned more than $500 in interest (even at a low interest rate) and
thus would have been required to remit the excess interest earned to the Federal
government.
Remington College Calculated Imputed Interest
In January 2021, Remington College calculated the amount of interest its Institutional
grant funds might have earned (imputed interest) had the funds been deposited in an
interest-bearing account from the start. Remington College calculated and set aside
$1,876 for imputed interest that the school believes its Institutional grant funds would
20
Remington College contracted with a third-party vendor to draw down Student Aid grant funds and
deposit the funds in the school’s operating bank account.
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have earned. We did not assess the reasonableness of Remington College’s interest
calculation.
It is critical that schools not draw Federal funds before they have immediate need for
the funds. The U.S. Treasury incurs additional borrowing costs when a school draws
Federal funds in advance of its immediate cash needs because the U.S. Treasury often
borrows the cash needed to fund Federal programs and, as a result, incurs interest
costs.
Recommendations
We recommend that the Assistant Secretary for Postsecondary Education—
3.1 Require Remington College to incorporate in its policies and procedures for
managing Institutional grant funds the Federal cash management requirements
related to minimizing the time between drawing down and spending Federal
grant funds, including HEERF funds; maintaining the funds in an interest-bearing
account; and remitting interest earned in excess of $500 in accordance with
2 C.F.R. § 200.305(b).
3.2 Require Remington College to incorporate in its policies and procedures for
managing Student Aid grant funds the Federal cash management requirements
related to maintaining the funds in an interest-bearing account and remitting
interest earned in excess of $500 in accordance with 2 C.F.R. § 200.305(b).
3.3 Determine whether Remington College accurately calculated interest and
ensure that the correct amount of interest is returned to the Federal
government in accordance with 2 C.F.R. § 200.305(b)(9).
Remington College Comments
Remington College disagreed with the finding, stating that at the time it drew down the
Institutional grant funds (May 2020), the Department had advised schools to use the
funds expeditiously and its single draw of Institutional grant funds facilitated swift
administration of the funds. Remington College also said that the Department’s initial
cash management guidance was limited and did not mention the requirement that
schools limit the time between draw and expenditure of HEERF grant funds to 15 days.
Remington College acknowledged that documents accompanying the GAN that it
received from the Department discussed minimizing the time between drawing and
spending Federal funds, while also noting that the GAN and the Department’s initial
HEERF guidance did not include the 15-day timeframe. Remington College
acknowledged that subsequent GANs included the 15-day timeframe and that it should
not have drawn all Institutional grant funds in a single transaction.
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Remington College stated that it did not know that HEERF grant funds had to be
deposited into an interest-bearing account because at the time it drew down the funds,
that requirement was not covered during training webinars that school officials
attended or during discussions that these officials had with the school’s auditors and
counsel. Remington College noted that the Department issued additional cash
management guidance in October 2020 (7 months after HEERF grant funds were
awarded to schools), suggesting that the Department’s prior guidance was unclear.
While it disagreed with the finding, Remington College noted the corrective actions it
has taken which include returning unexpended Institutional grant funds to the
Department, setting aside money to cover the interest that would have been earned on
those funds, updating its policies and procedures for managing Institutional grant funds
to include applicable cash management requirements, and setting up interest-bearing
accounts for its Institutional and Student Aid grant funds. Remington College also
agreed to remit interest earned in excess of $500 in accordance with 2 C.F.R.
§ 200.305(b).
Office of Inspector General Response
We acknowledge that the Department strengthened its guidance regarding cash
management in its October 2020 FAQ document and in GANs for CRRSAA and ARP
funds. However, this does not excuse grantees from complying with the Federal cash
management requirements that they agreed to follow when they applied for and
received CARES Act funds. Enclosure 4, which was attached to the Student Aid and
Institutional GANs that Remington College signed, described the cash management
requirements under 2 C.F.R. § 200.305(b) that Remington College must follow. The
requirements included minimizing the time between draw and disbursement of grant
funds and depositing those grant funds in an interest-bearing account. Further, as noted
in this report, Remington College did not take actions to comply with the Federal cash
management requirements until January 2021 (3 months after the Department’s
October 2020 FAQ update) when we informed the school that it was not complying with
those requirements.
Remington College stated that its single draw of Institutional grant funds facilitated swift
administration of the funds and was done in response to the Department advising
schools to use funds expeditiously. However, grant funds that are drawn down and
deposited into a school’s bank account do not constitute a ‘use’ of those funds. Funds
are used when they pay for allowable costs. As noted in this report, Remington College
drew down the entire $6.7 million in Institutional grant funds in May 2020 and had only
spent (used) $1.1 million (17 percent) as of December 31, 2020. In its comments,
Remington College acknowledged that it should not have drawn down the entire
$6.7 million in May 2020.
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We did not make any changes to the finding and recommendations based on Remington
College’s comments. Remington College’s proposed actions, if implemented, are
responsive to the recommendations.
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Appendix A. Scope and Methodology
Our audit covered Remington College’s use of HEERF funds from the grant award date
through September 30, 2020. The award date for Remington College’s Student Aid grant
was April 25, 2020, and the award date for its Institutional grant was May 5, 2020.
Because Remington College drew down but did not expend all Institutional grant funds
by September 30, 2020, we also included in our review expenditures through
December 31, 2020, that were paid for with Institutional grant funds that the school had
drawn down by September 30, 2020. Our audit also covered Remington College’s cash
management practices and reporting of HEERF expenditures.
To achieve our objective, we first gained an understanding of the following laws,
regulations, and other guidance relevant to HEERF:
• Section 18004 of the CARES Act, “Higher Education Emergency Relief Fund;”
• Section 314 of CRRSAA, “Higher Education Emergency Relief Fund;”
• Section 2003 of ARP, Higher Education Emergency Relief Fund;
• 2 C.F.R. Part 200 (Uniform Guidance), including sections 200.305(b) (Cash
management by non-Federal entity), 200.318 to 200.320 (General procurement
standards and competition), and 200.403 (Factors affecting allowability of costs
to Federal grants);
• Department’s Interim Final Rule (June 17, 2020) regarding student eligibility;
Secretary of Education letters (April 9 and April 21, 2020) addressing school
access to HEERF grants; and five HEERF FAQ documents issued from April
through October 2020, including Student Portion FAQs (April 9, 2020),
Supplemental FAQ regarding allowable uses of HEERF funds before CRRSAA was
enacted (June 30, 2020), and FAQ Rollup Document (October 14, 2020); and
• Remington College’s Student Aid and Institutional grant documents, including its
signed Certification and Agreement and the Grant Award Notification.
We also reviewed the following prior Office of Inspector General and Government
Accountability Office reports to gain an understanding of common risks associated with
managing emergency grants, such as HEERF:
• Office of Inspector General reports, Challenges for Consideration in
Implementing and Overseeing the CARES Act, X20DC0003 (September 2020);
and Lessons from Implementing the American Recovery and Reinvestment Act of
2009, X09M0002 (September 2014); and
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• Government Accountability Office report, COVID-19: Opportunities to Improve
Federal Response Efforts, GAO-20-625 (June 2020).
We then gained an understanding of Remington College’s processes for drawing down
and managing HEERF funds, awarding and distributing Student Aid funds to students,
spending Institutional funds, and preparing HEERF expenditure reports through
interviews and reviews of relevant documentation. We interviewed employees, officials,
or both, from Remington College’s Accounting, Financial Aid, and Financial Assistance
Compliance departments who had a significant role in administering the school’s HEERF
funds. We also interviewed Remington College’s Provost and General Counsel of Human
Resources. To assess the reliability of the testimonial evidence, we compared
information obtained through interviews with relevant documents and records. We
concluded that the testimonial evidence we obtained was sufficiently reliable within the
context of our audit objective.
We reviewed Remington College’s written policies and procedures for managing,
authorizing, and accounting for HEERF-related transactions and expenditures.
Additionally, we reviewed Remington College’s drawdown and refund information from
the Department’s G5 system. We also reviewed relevant information from Remington
College’s bank statements and accounting and student financial aid systems. We
describe how we used this information to review Remington College’s (1) use of Student
Aid and Institutional grant funds in the Sampling Methodology section on the next page
and (2) cash management practices and HEERF reports below.
Cash Management. We reviewed Remington College’s cash management practices to
determine whether the school was complying with Federal cash management
requirements. We compared Remington College’s drawdowns of Student Aid and
Institutional funds (obtained from the Department’s G5 system) to its expenditure
records to determine whether the school minimized the time between drawing down
and spending those funds. We also traced drawdown information from the
Department’s G5 system to Remington College’s bank statements and accounting
records to verify that the information reconciled. Lastly, we reviewed the type of
accounts that Remington College used to deposit HEERF funds to determine whether
the accounts earned interest.
Reporting. We reviewed the following Student Aid and Institutional reports to
determine whether (1) Remington College posted its reports on use of HEERF funds on
time and (2) the information included in those reports were complete and accurate:
• Student Aid report dated June 11, 2020 (initial report);
• Student Aid report dated July 24, 2020 (45-day report);
• Student Aid report for quarter ended September 30, 2020;
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• Institutional report for quarter ended September 30, 2020; and
• Institutional report for quarter ended December 31, 2020.
To determine whether the reports were submitted on time, we compared each report's
posting date to the reporting due date established by the Department. To determine
whether the reports included complete and accurate information, we compared the
information in each report to the Department’s reporting requirements and to the
applicable underlying source data (for example, school’s accounting records, bank
statements).
Sampling Methodology
Student Aid Expenditure Selection and Testing
During our audit period, Remington College awarded 2,214 Student Aid grants to
2,211 students. We used stratified, random sampling to select 30 Student Aid grants for
review. We considered the following when defining the strata from which samples
would be selected for testing: (1) whether the student had filed a Free Application for
Federal Student Aid (FAFSA) with the Department (students with a FAFSA), (2) whether
the student had received a Pell grant or Direct loan (students with financial aid), and
(3) the school official who reviewed the Student Aid grant application. 21 On account of
these factors, we defined seven distinct strata, as shown in Table 5.
21
Two Remington College officials were responsible for reviewing and approving students’ applications
for Student Aid grants. We chose to create a stratum for each unique situation that applied to each
reviewer.
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Table 5. Universes and Samples of Student Aid Grant Expenditures through
September 30, 2020
Sample Coverage—
Universe Student Sample Student
Student Grant Count
Stratum Description Grant Count and Grant Count and
and Dollar Amount
Dollar Amount Dollar Amount
(percent)
Reviewer 1—Students 882 grants 10 grants 1.1%
1 with both a FAFSA and
financial aid. $1,631,700 $18,500 1.1%
Reviewer 1—Students 1 grant 1 grant 100.0%
2 with no FAFSA but with
financial aid. $1,850 $1,850 100.0%
Reviewer 1—Students 18 grants 3 grants 16.7%
3 with a FAFSA but no
financial aid. $33,300 $5,550 16.7%
Reviewer 1—Students 1 grant 1 grant 100.0%
4 with no FAFSA and no
financial aid. $1,850 $1,850 100.0%
Reviewer 2—Students 1,284 grants 10 grants 0.8%
5 with both a FAFSA and
financial aid. $2,375,400 $18,500 0.8%
Reviewer 2—Students
with both a FAFSA and 6 grants 2 grants 33.3%
6 financial aid and who
were awarded two $11,100 $3,700 33.3%
grants.
Reviewer 2—Students 22 grants 3 grants 13.6%
7 with a FAFSA but no
financial aid. $40,700 $5,550 13.6%
2,214 grants 30 grants 1.4%
Total -
$4,095,900 $55,500 1.4%
For the 30 grants tested, we reviewed relevant information from the school’s student
financial aid system (for example, student enrollment agreements, grant applications,
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ISIRs) to determine whether the students were eligible to receive the grants. 22 To be
eligible for a Student Aid grant, the student needed to be eligible to participate in the
Title IV programs and could not have been enrolled in a 100 percent distance education
program at the time the President declared a national emergency due to the
coronavirus (March 13, 2020). We limited our review to student eligibility. We did not
perform work to determine how students spent the grant funds or whether the
students used the funds for intended purposes. The results from our testing pertain only
to the students included in our review and should not be projected to the entire
universe of students who received Student Aid grant funds.
Institutional Expenditure Selection and Testing
During our audit period, Remington College used Institutional funds to make
437 purchase transactions totaling $1.2 million. We used a combination of judgmental
and random sampling to select 25 Institutional expenditures for review. We
judgmentally selected the 20 expenditures exceeding $6,500 for review (20 largest
expenditures) and randomly selected 5 of the remaining 417 expenditures for review.
We selected the 20 largest expenditures because they represented about 95 percent of
all Institutional expenditures. We randomly selected five additional expenditures to
ensure that our testing covered some small dollar expenditures. Table 6 below
summarizes our selection of 25 Institutional expenditures for review.
Table 6. Universes and Samples of Institutional Grant Expenditures through
December 31, 2020
Sample Coverage –
Universe Institutional Sample Institutional Institutional Grant
Grant Expenditure Grant Expenditure Expenditure Count
Description Count and Dollar Count and Dollar and Dollar Amount
Amount Amount (percent)
Institutional 20 expenditures 20 expenditures 100.0%
Expenditures
Exceeding $6,500 $1,163,614 $1,163,614 100.0%
All Other Institutional 417 expenditures 5 expenditures 1.2%
Expenditures $58,237 $9,690 16.6%
Total 437 expenditures 25 expenditures 5.7%
$1,221,851 $1,173,304 96.0%
22
As part of this work, we also reviewed documentation to confirm that Remington College distributed
the Student Aid grant funds to the students.
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For the 25 expenditures tested, we reviewed supporting documentation such as
purchase authorizations, justifications, and invoices to determine whether the
expenditures were allowable and for purposes intended under the CARES Act.
Specifically, we reviewed each expenditure to determine whether it was valid,
authorized, allowable, allocable, and reasonable in accordance with the CARES Act;
Uniform Guidance at 2 C.F.R. Part 200; applicable program guidance (HEERF FAQs); the
school’s policies and procedures; and other applicable laws, regulations, and guidance.
The results from our testing pertain only to the expenditures included in our review and
should not be projected to the entire universe of Institutional grant expenditures.
Use of Computer-Processed Data
We relied, in part, on computer data stored in the school’s financial aid and accounting
systems to accomplish our objective. We obtained information from the school’s
financial aid system on enrollment, attendance, and other data necessary to confirm a
student’s eligibility for a Student Aid grant. We also obtained information from the
school’s financial aid system on the number of students receiving Student Aid grants
and the related total dollar amount of those grants to determine whether the school
included complete and accurate information in its Student Aid reports. To assess the
reliability of this information, we compared student data in the school’s financial aid
system with information in the Department’s National Student Loan Data System and
Central Processing System. We also compared Student Aid distribution information in
the school’s financial aid system with information in the school’s bank statements.
Further, for the 30 Student Aid grants that we tested, we reviewed copies of the checks
(front and back) that Remington College mailed to students to verify the payment
amount and identity of the person who cashed the check. We did not identify any issues
and concluded that data in Remington College’s student aid system were sufficiently
reliable for the purposes of our audit.
To assess the reliability of information obtained from the school’s accounting system,
we compared HEERF fund deposit and expenditure information recorded in the
accounting system with information in the Department’s G5 system, the school’s
monthly bank statements, and vendor invoices. The information reconciled and we
concluded that data in Remington College’s accounting system were sufficiently reliable
for the purposes of our audit.
Internal Controls
We considered only limited aspects of internal controls over compliance with the
applicable Federal requirements to be significant within the context of the audit
objective. Therefore, our assessment of the design of internal controls was limited to
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gaining an understanding of Remington College’s processes (controls) within the context
of the individual transactions selected for testing and determining the underlying cause
for identified issues.
Compliance with Standards
We conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objective. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our
audit objective.
We performed our audit work remotely from December 2020 through May 2021. We
discussed the results of our audit with Remington College officials on May 25, 2021.
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Appendix B. Acronyms and Abbreviations
ALN Assistance Listing Number
ARP American Rescue Plan
CARES Act Coronavirus Aid, Relief, and Economic Security Act
CFO Chief Financial Officer
C.F.R. Code of Federal Regulations
CRRSAA Coronavirus Response and Relief Supplemental Appropriations
Act
Department U.S. Department of Education
FAFSA Free Application for Federal Student Aid
FAQ Frequently Asked Questions
GAN Grant Award Notification
HEERF Higher Education Emergency Relief Fund
ISIR Institutional Student Information Record
OPE Office of Postsecondary Education
Title IV Title IV of the Higher Education Act of 1965
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Remington College Comments
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