Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.