The F/A consultant was wrong. Schools can do what they want … as long as what they do is within the regulations and their own policies. And if it is professional judgment, it must still be within guidelines and internal policies … and must be documented properly.
That said, a school could do whatever it wants, but if it gets caught doing the wrong thing (in an audit or a program review), it has to fix what it did wrong. If the school has to remove an improper award (such as a Pell grant), the school could require the student to repay it (within any allowable time limits) or could cover it with their own funds, if they do that.
Usually, the changes a school makes are due to something allowable - but schools do make mistakes.