Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Federal Perkins Loan Program
Assistance Listing Number: 84.038
Federal Award Identification Number and Year: N/A
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: July 1, 2022 to June 30, 2023
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
• Other Matters
Criteria or Specific Requirement: 2 CFR 200.303 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 provider for its Perkins Loan servicing. Federal regulations require the institution to perform due diligence on the third party servicer to ensure they are following federal regulations. The institution did not perform their due diligence for fiscal year 2023.
Questioned Costs: None
Context: The due diligence typically performed by the institution is the review of the third party servicer's compliance report. However, the third party servicer was delayed in having this report issued. The institution did not have an alternate plan for performing due diligence over the third party servicer.
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 could perform their required due diligence on the third party servicer and the institution did not have an alternate plan established.
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
Auditor’s Recommendation: We recommend the University implement a procedure with the third party servicer to ensure that their Title IV compliance report is completed timely so that the University can perform the necessary due diligence they need to perform.
Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.