Audit 367083

FINDING 2024-001 Information on the federal program: Subject: Assistance to Firefighters Grant Program – Internal Controls Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Program Assistance Listing Number: 97.044 Federal Award Numbers and Years (or Other Identifying Numbers): EMW-2022-FG-08560 Pass-Through Entity: N/A Compliance Requirement: Equipment and Real Property Management Audit Finding: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system place the City at risk of noncompliance with the grant agreement and the compliance requirements. The lack of internal controls could have allowed misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs: There were no questioned costs identified. Context: The capital asset listing provided by the City did not include any of the assets purchased with the Assistance to Firefighters Grant program funds. The fire station has a system in place to track their capital assets, however, upon review of the capital asset listing, it did not include the assets purchased with the grant noted above. Further, the capital asset listing did not include information such as the estimated useful life of the equipment nor did it include the funding source used to purchase the equipment. The amount of equipment purchases with the Assistance to Firefighters Grant funds, for the year ended December 31, 2024, was $815,546. Identification as a repeat finding, if applicable: No. Not a repeat finding. Recommendation: We recommend the City update the capital asset listing at least annually to include all equipment and real property acquisitions and review for potential capital asset dispositions. The capital asset listing should include all required information to track capital asset acquisitions purchased with federal funding. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.