Audit 390792

Finding #: 2025-001 Research and Development Cluster (Various Assistance Listing Numbers, refer to SEFA) Type of Finding: Equipment and Real Property Management - Compliance and Internal Control (Significant Deficiency) Criteria: In accordance with 2 CFR section 200.313(d)(2), a physical inventory of property purchased with federal grant funds must be conducted, and the results must be reconciled with the property records at least once every two years. Condition/Context: Montclair State University (the “University”) records and assigns an asset identification number to each equipment purchase made using Research and Development grant funds through its financial reporting system as assets are acquired for use. However, the University is also required to physically inspect and document inventory observations at least once every two years, in accordance with 2 CFR section 200.313(d)(2). As part of the audit procedures performed, we determined that the University did not perform and document the required physical observation within the prior two years. Cause/Effect: While the University has procedures in place to properly track equipment purchases made through the use of Research and Development funds, the controls in place did not include ensuring that a physical inventory count was performed at least once every two years, as required. Questioned Costs: None identified. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the University strengthen controls over the physical inventory review process to ensure inventory observations are performed and documented at least once every two years.