Finding Text
Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.038 Award Period: June 1, 2024 to May 31, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 34 CFR 674.19 states that an institution shall keep the original Perkins loan paper promissory note or original paper MPN and repayment schedules in a locked fireproof container, or if a promissory note was signed electronically, the institution must store it electronically and the promissory note must be retrievable in a coherent format. An original electronically signed MPN must be retained by the institution for 3 years after all the loans made on the MPN are satisfied. Condition: During our Perkins loan recordkeeping testing, we noted that 2 students out of 40 tested with retired or assigned loans did not have a Master Promissory Note available as support in the College’s records. Questioned Costs: N/A Context: The College was unable to locate MPNs for two students in our sample. Cause: The absence of MPNs may be due to incomplete record retention or gaps in documentation transfer during the loan retirement or assignment process. Effect: Without the MPNs, the institution may be unable to demonstrate that the loans were legally executed and agreed upon by the borrowers, which could result in delays or issues during federal assignment of Perkins loans and may impact the institution’s compliance with federal recordkeeping requirements. Repeat Finding: No Recommendation: We recommend that the College review all retired/assigned Perkins loan files to ensure MPNs are present and properly retained. Views of Responsible Officials: There is no disagreement with the audit finding.