Audit 409959

2 CFR § 3474.1(b) gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1), which requires that 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 sale price of the property. 2 CFR § 200.313(d)(2) requires that physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. 2 CFR § 200.313(d)(3) requires that a control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Due to internal control deficiencies over equipment and inventory, a bus purchased for $95,908 in 2022 from the Education Stabilization Fund grant, Assistance Listing #84.425U was excluded from the fixed asset listing. In addition, the School District’s internal policies did not require a physical inventory to be performed within the required two-year period. As such, School District did not perform the required physical inventory. Exclusion of assets from official listings could result in further noncompliance upon disposition of the asset. Failure to perform required physical inventory could result in equipment being damaged, misappropriated or lost. The School District should implement procedures to help ensure that all equipment purchased from Federal funds is properly recorded and tracked by the fund used to purchase the equipment. In addition, the fixed asset listing should include 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. The School District should design and implement procedures to help ensure that physical inventory is performed once every two years, at a minimum. This will help to mitigate the risk of noncompliance for tracking and subsequent disposition of the asset.