Finding 387659 (2023-001)

Student Financial Assistance Cluster Federal Agency: United States Department of Education Federal Program: Perkins Loan Program Assistance Listing Number: 83.038 Federal Award Years: 2023 Reference: 2023 001 Criteria Institutions must retain promissory and master promissory notes (MPN), and repayment records for each Perkins Loan program loan made. Institutions are required to keep original paper promissory notes or original paper MPNs and repayment schedules in a locked, fireproof container. The original promissory notes and repayment schedules must be kept until the loans are satisfied. If required to release original documents in order to enforce the loan, the institution must retain certified true copies of those documents. After the loan obligation is satisfied, the institution shall return the original or a true and exact copy of the note marked “paid in full” to the borrower, or otherwise notify the borrower in writing that the loan is paid in full and retain a copy for the prescribed period. Title 2 U.S. Code of Federal Regulations Part 200 (2CFR 200) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 303(a) states, the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our test work over Perkins Loan record keeping, we noted for 3 out of 40 loans in repayment selected for testwork, the College was unable to provide the original signed promissory note to evidence it being maintained by the College in a secure fireproof container. We deemed this to be a significant deficiency in internal control over compliance. Cause The condition resulted from the College’s Student Financial Aid department not being able to locate the original promissory notes for 3 students selected for testwork. They indicated that there was a transition to a new service provider that may have resulted in records being relocated several years ago. Possible Asserted Effect Failure to maintain proper Perkins loan documentation could result in incomplete or inaccurate record keeping in accordance with federal requirements. Insufficient internal controls to ensure that original records are maintained resulted in the College not being compliant with this requirement. Questioned Costs None. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding This is not a repeat finding.