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A Report on State of Texas Compliance with Federal Requirements for the Student Financial Assistance Cluster of Federal Programs for the Fiscal Year Ended August 31, 2010

February 2011

Report Number 11-022

Overall Conclusion

With the exception of certain non-compliance detailed in this report, the State of Texas complied in all material respects with the federal requirements for the Student Financial Assistance cluster of federal programs in fiscal year 2010.

As a condition of receiving federal funding, U.S. Office of Management and Budget (OMB) Circular A-133 requires non-federal entities that expend at least $500,000 in federal awards in a fiscal year to obtain annual audits. Those audits test compliance with federal requirements in 14 areas, such as eligibility, disbursement of funds, and reporting. In addition, each program may outline special tests specific to the program that auditors are required to perform. The Single Audit for the State of Texas included (1) all high-risk federal programs for which the State expended more than $85,612,909 in federal funds during fiscal year 2010 and (2) other selected federal programs.

From September 1, 2009, through August 31, 2010, the State of Texas expended $56.9 billion in federal funds for federal programs and clusters of programs. The State Auditor's Office audited compliance with requirements for the Student Financial Assistance cluster of federal programs at 17 higher education institutions. Those 17 higher education institutions spent $2,076,574,967 in federal Student Financial Assistance funds during fiscal year 2010.

Auditors identified 53 findings for the Student Financial Assistance cluster of federal programs, including 2 material weaknesses with material non-compliance and 51 significant deficiencies. Forty-seven of the 51 significant deficiency findings also had elements of non-compliance.

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