Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Federal Perkins Loan Program
Assistance Listing Number: 84.038
Award Period: 7/1/2022 – 6/30/2023
Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters
Criteria or specific requirement: Code of Federal Regulations Title 34, Subtitle B, Chapter VI, Part 674.19 requires that in administering its Federal Perkins Loan program, an institution shall establish and maintain an internal control system of checks and balances that ensures that no office can both authorize payments and disburse funds to students. When an institution uses a third-party servicer for its Perkins Loan program, the institution must perform due diligence to ensure that the third-party service is in compliance with the requirements for the functions the third-party servicer is performing for the institution. Such due diligence could include obtaining and reviewing the third-party servicer’s most recent Title IV compliance audit.
Condition: The University utilizes a third party service for its Perkins Loan servicing. This is a very common practice for colleges and universities in order to provide the most efficient and effective means to not only collect loans but meet the federal regulations for servicing student Perkins Loans. In order to perform the due diligence required per the Code of Regulations, the institution utilizes the external compliance report performed for the third party servicer by other auditors. The third party servicer’s compliance audit report for the year ended June 30, 2023 was not issued as of the report date of the uniform guidance report. Therefore, the University was unable to perform due diligence on the third party provider’s internal control over the Perkin’s requirements.
Questioned costs: None.
Context: We noted that the University was not able to obtain the third party’s compliance report as of the date of the Uniform Guidance Report.
Cause: The third party servicer, did not have their Title IV compliance audit report completed for the year ending June 30, 2023 so that the University can perform their required due diligence on the third party servicer.
Effect: The University did not perform due diligence to ensure that the third-party service is in compliance with the requirements for the functions the third-party servicer is performing for the institution.
Repeat finding: No.
Recommendation: We recommend the University implement a procedure with the third party servicer to ensure that their report is completed timely so that the University can perform the necessary due diligence they need to perform.
Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.