Finding Text
Finding No. 2024‐001: Missing Original Promissory Note in Perkins Loan File
Assistance Title: Student Financial Assistance Cluster – Federal Perkins Loan Program
Assistance Listing Number: 84.038
Federal Agency: U.S. Department of Education
Type of Finding: Significant Deficiency and Noncompliance
Category of Finding: Special Tests and Provisions: Perkins Loan Recordkeeping and Retention
Known Questioned Costs: $‐0‐
Likely Questioned Costs: $‐0‐
Criteria Per 34 CFR §674.19(e), institutions participating in the Federal Perkins Loan Program are required to
maintain accurate and complete records for each borrower, including the original signed promissory note.
Condition During our compliance testing of 25 Perkins Loan files, we discovered that one file—representing
approximately 4% of the sample—was missing the original promissory note. The loan in question had an
original amount of $600, with an unpaid balance of $459 as of June 30, 2024.
Cause The missing promissory note appears to be due to inadequate internal controls over document
retention procedures, resulting in the oversight or misplacement of critical loan documentation.
Effect Without the original promissory note, the College may be unable to enforce repayment of the loan,
potentially resulting in financial loss to the Perkins Loan Program and noncompliance with federal regulations.
Repeat Finding This is not a repeat finding.
Recommendation We recommend that the College strengthen its document retention policies and
procedures to ensure that all original promissory notes are properly maintained in the loan files. This may
include implementing a tracking system for loan documentation and conducting periodic audits of loan files
to verify the presence of required documents.
Management’s Response Management concurs with this finding. See Management’s Response and
Corrective Action plan.