Views of Responsible Officials: Management respectfully acknowledges the auditors’ observation regarding the reconciliation of the fixed asset schedule to the BarCloud inventory management system. However, management disagrees with the classification of this matter as a Significant Deficiency and wi...
Views of Responsible Officials: Management respectfully acknowledges the auditors’ observation regarding the reconciliation of the fixed asset schedule to the BarCloud inventory management system. However, management disagrees with the classification of this matter as a Significant Deficiency and wishes to provide the following context for the record. Throughout the close of fiscal year 2025, management dedicated substantial time and resources to a comprehensive review and reconciliation of the Organization’s fixed asset records. This was a deliberate, proactive initiative undertaken by the finance and accounting team to identify and resolve historical discrepancies between the accounting system and BarCloud, enhance the quality and completeness of asset-level records, and establish a stronger foundation for ongoing compliance with 2 CFR 200.313(d). The discrepancies noted by the auditors were, in large part, the very items identified and addressed through this reconciliation effort—not indicators of a systemic or ongoing control failure.As part of this undertaking, management initiated a comprehensive effort to migrate all equipment records from legacy, manual binder-based files maintained at field offices to a centralized online BarCloud system. This effort is now substantially complete. Because a number of these binders were maintained at MBN’s overseas bureaus, obtaining timely access to the physical records presented logistical challenges that required additional coordination and time to resolve. To support this work, MBN engaged local vendors in each country where equipment records were maintained to perform additional inventory review and reconciliation, as well as independent professionals to assess the fair market value of equipment identified for disposition and to perform the required data sanitization of IT equipment in accordance with 2 CFR 200. As a result of this work, the Organization now maintains materially clean and reconciled fixed asset records. The condition observed during audit testing reflects the state of records prior to the completion of management’s remediation efforts, not the current state of the Organization’s controls. Management believes that the effort expended to bring the records into alignment, and the improved control environment that now exists as a result, should be considered in the assessment of severity. Accordingly, management does not believe that the remaining matters, in the context of the substantial remediation completed, rise to the level of a Significant Deficiency. Management agrees with the auditors’ recommendation to continue formalizing procedures for ongoing reconciliation between the accounting records and BarCloud. Management is committed to establishing a common asset identification methodology, implementing a periodic reconciliation schedule, and maintaining supporting documentation to evidence the process going forward. We appreciate the auditors’ recognition of the significant undertaking completed during fiscal year 2025 and remain committed to maintaining full compliance with Federal equipment management requirements under 2 CFR 200.313(d) and 2 CFR 200.303.