Finding 579908 (2023-003)

2023-003 Perkin’s Loan Recordkeeping and Record Retention Type of Finding – Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Perkins Loans – CFDA 84.038 Criteria: In accordance with 34 CFR 674.19.(e) - Institutions must retain original or true and exact copies of promissory and master promissory notes, repayment records, and cancellation and deferment requests for each Perkins loan made. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct noncompliance in a timely manner. Condition: Two students with a Perkin’s loan in repayment did not have the proper documentation retained in the students’ file in accordance with 34 CFR 674.19(e). Questioned Costs: None identified. Context: Out of a sample of 50 students selected for testing, 25 of the students were in repayment and 25 of the students had a loan that was paid, canceled or assigned within the previous three years. Two students of the 25 who had a loan that was paid, canceled or assigned were not compliant with the recordkeeping and record retention requirements. The population for loans in repayment includes 237 students. Effect: The College was not compliant with Federal requirements of the Student Financial Assistance Program. Cause: The loan file for one student could not be located and the promissory note for one student could not be located. While the College believes these files were misfiled, internal controls over filing and usage of loan files should be sufficient to track and ensure timely refiling after use. Identification as a Repeat Finding: This is a repeat finding of finding 2022-003 that was reported for the year ending June 30, 2022. Recommendation: We recommend the College review the filing processes for loan files to refine controls in place on filing and tracking of such files. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is reviewing the process and will refine the process as necessary.