Audit 392494

Research and Development Cluster – various ALNs Statistically valid sample: No, and it was not intended to be. Repeat finding: Not a repeat finding. Compliance Requirement – Equipment and Real Property Management – Material Weakness and Material Noncompliance Criteria Non federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (a) 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 federal award identification number), who holds title, the acquisition date, 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 sales price of the property (2 CFR section 200.313(d)(1)). (b) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (c) 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 (2 CFR section 200.313(d)(3)). Condition and Context There were several matters noted. First, there was no evidence that the University conducted a physical inventory of its federal equipment in the past two years. The value of equipment related to the Research and Development Cluster is $1,141,319 at June 30, 2025. Second, we selected seven pieces of equipment out of thirty one pieces of equipment that existed at June 30, 2025. While the property records included all the required elements, three of the pieces were not properly tagged. Cause Management was not aware of the two-year physical inventory compliance requirement over federally purchased equipment. Management incorrectly noted that the requirement was once every three years, resulting in non-compliance. Effect The equipment purchased with federal funds may not be properly safeguarded. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures over equipment, including adding procedures to perform the physical inventory at least once every two years, timely tagging equipment upon the purchase of equipment with federal funds, and properly reviewing and reconciling equipment records with the results of the inventory. Views of Responsible Official Management agrees with the recommendation. Management is currently in the process of conducting a full physical inventory of equipment purchased using federal funds that have a net book value greater than zero in accordance with 2 CFR sections 200.313(c) through (e). The inventory process will be reviewed by management to ensure timely, accurate completion. Going forward, the University will tag all new assets acquired using federal funds. In addition, a revised policy has been established relating to an annual physical inventory of federally purchased equipment to facilitate compliance and increase related inventory controls. The revised policy includes, among other details, standard requirements for inventory tagging and related monitoring.