Audit 394870

Equipment Property Management Federal Program: Congressional Directives (ALN 93.493) Federal Agency: Department of Health and Human Services Federal Award Number: 1CE1HS52890-01-00 Federal Award Year: September 30, 2023 through June 30, 2026 Criteria or Requirement Per 2 CFR section 200.313, 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. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition and Context For 2 out of 9 purchase transactions, equipment exceeding the capitalization threshold per 2 CFR section 200.1 was not capitalized. Therefore, a property record did not exist for federally funded equipment purchased in the amount of $937,768. The total program expenditures were $2,112,657 for which $1,640,656 were capital equipment purchases and $472,001 were non-capital purchases. Further, $67,919 of the $702,888 that was capitalized, the property record did not properly identify the asset’s federal award program. Cause and Potential Effect The University's internal controls for determining and documenting whether an equipment acquisition was a capital asset for which a property record should be created in the system with the required information was not operating effectively. Accordingly, the University acquired federally funded equipment, and a property record was not created. Questioned Cost There were no questioned costs associated with the finding. Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit Yes – prior year finding 2024-003. Recommendation We recommend the University enhances the precision of the controls over equipment purchases to ensure that a property record is created within the system containing the required information, inclusive of the federal award, for all federally funded equipment. View of Responsible Officials Management of the University takes no exception to this reported finding. We have implemented the remedial actions as outlined in our Corrective Action Plan.