2025-001 Finding: Equipment Federal Program: Research and Development Cluster, Various Assistance Listing Numbers, Various Agencies, Award Year 2025 Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.313(d)) requires non-federal entities to maintain effective control and accountability for all federally funded equipment, including procedures to ensure assets exist, are used for authorized purposes, and are properly disposed of when no longer needed. Uniform Guidance further contemplates periodic physical inventories of equipment and reconciliation to property records at least once every two years. Policies and procedures should address all federal awards, regardless of awarding agency. Condition: Out of a sample of 25 assets, five assets with acquisition dates between 1990 and 2016, had been disposed but not removed from the asset subledger. In addition, a full inventory of federally funded assets was not completed within a two year timeframe and key data was not reconciled. Our sampling methodology was not, and was not intended to be, statistically valid. Questioned Costs: $52,511.60 - Costs relate to multiple awards within the Research and Development Cluster. Cause: The Organization's fixed asset monitoring policy is primarily designed to comply with National Institute of Health requirements and has not been expanded to fully incorporate Uniform Guidance requirements applicable to all federal awards. Controls were not operating as designed to identify and remove assets from the subledger when disposed. Effect: As a result, the Organization’s fixed asset records were not fully accurate or complete for certain federally funded assets, increasing the risk that assets disposed of in prior years remain recorded in the subledger and that federally funded equipment is not consistently tracked in accordance with Uniform Guidance. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization expands and formalizes its fixed asset monitoring policy to fully align with Uniform Guidance requirements, including (1) Performing and documenting a physical inventory of federally funded equipment at least once every two years, with reconciliation to the fixed asset subledger. (2) Ensuring timely communication and documentation of asset disposals to Finance for record updates. Views of Responsible Officials: The Organization agrees with the finding. See separate auditee document for planned corrective action.
2025-001 – Federal Equipment Inventory Cluster: Research and development Sponsoring Agency: Various Award Name: All awards for 3 campuses with federal equipment expenditures in the Schedules of Expenditures of Federal Awards (SEFA) Award Number: Various Assistance Listing Title: All awards for 3 campuses with federal equipment expenditures in the SEFA Assistance Listing Number: All awards for 3 campuses with federal equipment expenditures in the SEFA Award Year: 2024-2025 Pass-through entity: All pass-through awards for 3 campuses with equipment expenditures in the SEFA Criteria 2 CFR 200.313(d) requires that a physical inventory of equipment acquired in whole or in part under a Federal award must be conducted and the results reconciled with the property records at least once every two years and the recipient is responsible for maintaining and updating property records when there is a change in the status of the property. Condition Through our testing of federal equipment and real property management across four campuses, we identified deficiencies related to (1) the timeliness of required physical inventory procedures and (2) the completeness and accuracy of federal equipment listings. More specifically, our testing identified the following: Campus 1 This campus has a control by which all custodians are responsible for the completion of their federal equipment inventory on a 2-year rolling basis. Through discussion with the campus, the last equipment inventory observation for federal equipment was performed in July 2022 and covered half of the campus assets acquired through December 2021. As such, a physical inventory at this campus has not been completed over existing or newly acquired equipment in approximately 3.5 years, which is outside the two-year requirement. Through our federal equipment observation procedures, we selected 25 assets from the federal equipment listing to observe and also selected 25 pieces of equipment from the floor to trace back to the equipment listing. We noted the following: • For 2 equipment selections from the federal equipment listing, we were unable to verify the asset we selected was the asset viewed, as there was no tag, serial # or other identifying information we could validate to the equipment listing. • 1 equipment selection from the federal equipment listing was located but not in working condition and should have been disposed of. • 3 equipment selections were on the federal equipment listing, but were unable to be located or were previously disposed of and incorrectly on the equipment listing. • 1 equipment selection from the “floor” was federally funded, but not included in the list of federal assets. Campus 2 In order to comply with the federal biennial inventory requirement, this campus has a policy that every two years by 10/31, Equipment Certification Forms for each custodial code need to be submitted verifying the existence of the assets assigned to the custodian. We selected 25 custodial codes to review the two most recent Equipment Certification Forms to verify a physical inventory of federal assets was performed within two years. Through our testing, we noted the following: • 5 Equipment Inventory Certification Forms due by 10/31/25 were completed timely, however, the previous inventories for these custodial codes were each completed in October or November 2019 and thus 2 cycles elapsed between inventories, which is not in compliance with the federal biennial inventory requirement. • 5 Equipment Inventory Certification Forms due 10/31/25 were late (14 days, 10 days, 1 day, 81 days, and 3 days late, respectively). For 2 of the 5, the previous inventory was last completed in October 2019 and thus 2 cycles elapsed between inventories. Campus 3 This campus completes a full equipment inventory of the campus every 2 years. Based on the current cycle, all federal equipment was required to be inventoried between 7/1/22 and 6/30/24. Any inventories completed by 6/30/24 are considered timely and within the 2-year period, assuming the financial unit appropriately completed an inventory in the previous period covering 7/1/20 to 6/30/22. Each individual asset is "validated" in the equipment management system and dates of validation are noted upon inventory completion. In order to test the equipment validation control, 25 individual federal assets were selected for testing to 1) determine whether the asset was verified between 7/1/22 and 6/30/24; and 2) to review the date of the previous inventory to confirm the asset was inventoried within a two-year period. Through our testing, we noted the following: • 3 federal equipment selections were not validated during the most recent inventory cycle with the last validation being completed during the FY18 cycle (2 selections) and the FY22 cycle (1 selection) • 3 federal equipment selections were validated in the current cycle, however, they were not validated during the previous cycle and as such, more than two years elapsed between inventories. • 1 federal equipment selection was not validated in either the current or previous inventory cycle Additionally, through our federal equipment observation procedures, 2 out of 25 federal equipment selections were unable to be located. Cause • Campus 1 – Through discussion with the campus, no federal equipment inventory counts were performed since July 2022 due to lack of personnel. The equipment inventories not being performed timely were also the cause of the federal equipment listing not being complete and accurate. • Campus 2 - The 2019 inventories were due in 2021 (during COVID-19) and the University received a letter dated March 17, 2021 from the Department of Health and Human Services that stated: “We fully acknowledge the concerns detailed in your letter and hereby approve your request to delay the physical inventory of property for one fiscal year. The University of California should plan to resume the biennial physical inventory process in Fiscal Year 2022.” Those not completed in the subsequent inventory were overlooked. These custodial codes continued with no Equipment Certification Forms being submitted as the next due date overlapped with a significant system implementation, and the campus was not as diligent in following up with the custodians. Three of the four late submissions in 2025 were due to oversight of the deadline and the submission that was 81 days late was due to a new asset representative not realizing a certification had to be submitted until a follow-up notification was received. • Campus 3 - Assets not validated in the most recent cycle were missed due to resource constraints. Assets not inventoried in the previous cycle (and thus not within the two-year period) were due to being overlooked once inventories resumed after the COVID-19 pandemic period and not revisited timely due to resource constraints. The assets not located during the federal equipment observations procedures were assumed to have been disposed and the asset listing not appropriately updated. Effect Failure to complete physical inventories within the required two-year timeframe increases the risk that federal equipment records are incomplete or inaccurate and that discrepancies are not identified and corrected in a timely manner. Questioned Costs None noted. Recommendation We recommend that each campus review and, where necessary, update its federal equipment inventory policies and procedures to help ensure that (1) physical inventories are completed within the required two-year timeframe and (2) federal equipment listings are maintained in a complete and accurate manner in accordance with 2 CFR 200.313. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.
Federal Agency: Federal Government Federal Program Name: Research & Development, Agriculture Extension at 1890 Land-grant Institutions, and Higher Education Institutional Aid Assistance Listing Number: Multiple Federal Award Identification Number and Year: Multiple Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Material Weakness in Internal Control over Compliance Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Questioned costs: None. Context: During inquiries with management, the University had been unable to fill a staffing position to help implement correct action of tracking equipment purchased with Federal funds. Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat Finding: Yes, 2024-002 Recommendation: We recommend the University ensures that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Questioned Cost $ – Finding No. 2025-010: Equipment (Material Weakness) State Agency: Department of Land and Natural Resources Federal Agency: Department of Defense AL Number and Title: 12.107 – Readiness and Environmental Protection Integration Award Number and Award Year: N62742-22-2-0002 2022 Repeat Finding? No Condition During our audit, we examined all 16 acquisitions of equipment and real property in the current year. Of the 16 acquisitions, 15 were not properly entered into the State’s Fixed Asset Inventory System (FAIS). Criteria Pursuant to 2 CFR 200.313(b), the State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. The State’s procedures require division-designated individuals to be knowledgeable about submitting Form 17A – Detail Inventory of Property along with supporting evidence, such as purchase orders with proper approvals and final billings and invoices to the State Procurement Office to enter into FAIS in the quarter the asset is placed in service. Effect Failure to record equipment properly reflects noncompliance with State procedures and Federal requirements. Cause and View of Responsible Officials The department did not submit Form 17A timely due to delays and errors in preparation of the forms. Recommendation We recommend that the State department develop internal control procedures to ensure that items are entered into the FAIS accurately and in the proper period.
FINDING 2025-003 – Equipment Management: Significant Deficiency in Internal Control Over Compliance (SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS - SECTION III - FINDING 2025-003 FOR INCLUDED TABLE) Criteria – 2 CFR section 200.313(d)2: A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. Condition/Context – During our audit we requested the results of the most recent physical inventory of federally purchases equipment. The most recent physical inventory had been completed during the fiscal year ending June 30, 2020. Effect – Management may not have full knowledge of the current location, existence and condition of federally purchased equipment. Cause – University of San Diego does not currently have a protocol in place to initiate the physical inventory on the required basis. Repeat Finding – No. Recommendation – We recommend the University of San Diego implement a process to trigger the process of a physical inventory of equipment every other year. Views of Responsible Officials– Management concurs with this finding and has established new responsibilities at individual employee levels to allow for additional oversight over the process. The process of completing the inventory has also been added to the annual fiscal close process documentation.
Program: Epidemiology and Laboratory Capacity for Infectious Disease Federal Financial Assistance Listing Number: 93.323 Federal Grantor: U.S. Department of Health and Human Services Award No. and Year: Multiple Compliance Requirements: Equipment and Real Property Management Type of Finding: Material Weakness in Internal Control Over Compliance and Material Instance of Noncompliance Criteria: In accordance with 2 CFR section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: Property records were not maintained in accordance with Uniform Guidance for all property and equipment purchased. As a result, we were unable to (1) test whether differences between the physical inventory and equipment records were resolved and (2) sample equipment from the property records and physically inspect the equipment and determine whether the equipment is appropriately safeguarded and maintained. Cause: The HCA department did not have adequate internal controls to ensure its property records included all the requirements under Uniform Guidance or properly identify all property and equipment purchased with federal funds. Effect: Property records were not adequately maintained. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. We examined the Agency’s property records in total. Repeat Finding from Prior Years: Yes. Recommendation: We recommend the HCA department enhance internal controls to ensure its property records include all the requirements under Uniform Guidance and properly identify all property and equipment purchased with federal funds. Views of Responsible Officials: See separately issued Corrective Action Plan.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Research & Development Assistance Listing Number: 93.859 Federal Award Identification Number and Year: 5P20GM109097 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: Oklahoma State University Center for Health Sciences (OSU CHS) did not properly maintain physical inventory of property purchased with federal funds. Questioned costs: None. Context: During our testing, we identified 1 out of 40 equipment items sampled that were purchased with federal funds did not have documentation of a completed physical inventory and could not be physically observed, as the equipment was reported to be misplaced. Cause: OSU CHS did not have effective controls in place to ensure that equipment purchased with federal funds was subject to a timely physical inventory and appropriately tracked, including procedures to ensure equipment could be located for observation. Effect: As a result, OSU CHS was unable to demonstrate the existence and proper safeguarding of equipment purchased with federal funds, increasing the risk that equipment may not be properly monitored, safeguarded, or used in accordance with federal requirements. Repeat Finding: No Recommendation: We recommend that OSU CHS implement and consistently perform procedures to ensure that all equipment purchased with federal funds is subject to a physical inventory at least once every two years, with results properly documented and reconciled to equipment records. We further recommend that OSU CHS strengthen controls over tracking equipment locations to ensure that federally funded equipment can be readily identified and physically located when required. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agencies: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster and Congressional Directives Assistance Listing Number: R&D and 93.493 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.313(d), non-Federal entities must maintain effective control and accountability for all equipment acquired under a Federal award. Property records must be maintained and include, at a minimum, a description of the equipment (including a serial number or other identification number), source of funding (including the Federal award identification number), who holds title, acquisition date, cost of the equipment, percentage of Federal participation in the cost, location, use and condition of the equipment, and any ultimate disposition data, including the date of disposal and sales price or the method used to determine current fair market value. Additionally, 2 CFR §200.313(d)(2) requires a physical inventory of equipment to be taken and the results reconciled with the property records at least once every two years. 2 CFR §200.313(d)(3) further requires non-Federal entities to establish adequate safeguards to prevent loss, damage, or theft of equipment. Condition/Context: During our testing of Equipment and Real Property Management, we selected a sample of 11 equipment items, consisting of 6 items from the R&D Cluster and 5 items from the Congressional Directives program. The following exceptions were noted: • For 2 of the 6 R&D equipment items, the UEC did not perform a physical inventory within the last two years. • For 1 of the 6 R&D equipment items and 1 of the 5 Congressional Directives equipment items, the UEC did not maintain property records containing the information required under Federal equipment management requirements. • For 1 of the 6 R&D equipment items, we were unable to physically inspect the equipment, as photographs or other evidence of existence were not provided by the UEC. • For 1 of the 6 R&D equipment items, while initial property records (invoice support demonstrating review and confirmation that the equipment was received) were available, we were unable to confirm that ongoing control systems were in place to safeguard the equipment after initial acquisition. Questioned Costs: $77,610. Effect: Without complete property records, timely physical inventories, and adequate safeguarding controls, the UEC is unable to demonstrate compliance with Federal equipment management requirements, increasing the risk of loss, misuse, or improper disposition of equipment purchased with Federal funds. Cause: The UEC’s internal controls over equipment tracking, inventory, and safeguarding were not designed or implemented to consistently ensure compliance with Federal equipment management requirements across Federal programs. Repeat Finding: No. Recommendation: We recommend the UEC establish and implement equipment management procedures to ensure property records are complete, physical inventories are performed at least biennially, and adequate safeguards are maintained for all equipment acquired with Federal funds. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.
Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000 (2 CFR 200.1_Equipment). Title to equipment acquired by a non-Federal entity under grants and cooperative agreements vests in the non-Federal entity subject to certain obligations and conditions (2 CFR 200.313(a)). Non-Federal Entities Other than States Non-Federal entities other than States must follow 2 CFR 200.313(c) through (e) which require that: 1. Equipment, including replacement equipment, be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). 6. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return (2 CFR 200.313(d)(5)). 7. When original or replacement equipment acquired under a Federal award is no longer needed for a Federal program (whether the original project or program or other activities currently or previously supported by the Federal government), the non-Federal entity must request disposition instructions from the Federal awarding agency if required by the terms and conditions of the award. Items of equipment with a current per-unit fair market value of $5,000 or less may be retained, sold, or otherwise disposed of with no further obligation to the Federal awarding agency. If the Federal awarding agency fails to provide requested disposition instructions within 120 days, items of equipment with a current per-unit fair market value in excess of $5,000 may be retained or sold. The Federal awarding agency is entitled to the Federal interest in the equipment, which is the amount calculated by multiplying the current market value or sale proceeds by the Federal agency’s participation in total project costs (2 CFR 200.313(e)). While testing equipment acquisitions acquired using ESSER funds, one instance was noted in which equipment purchased was not fully added to the District records. Without proper controls over equipment requirements, there is an increased risk that the District is not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The District should establish (or perform existing) controls to include the required clauses of 2 CFR 200.313 to ensure equipment is being properly safeguarded and tracked.
Assistance Listing Number 84.425 Education Stabilization Fund Department of Education Passed Through North Dakota Department of Public Instruction Passed Through Turtle Mountain Band of Chippewa Indians Equipment/Real Property Management Criteria 2 CFR sections 200.313(c) and (e) includes a requirement for the non-federal entity to not encumber the equipment without prior approval of the federal awarding agency. 2 CFR section 200.311 includes a requirement for the non-federal entity, with prior approval by the ED or passthrough entity, may also use ESF funds to purchase real property, perform construction or minor remodeling, and for improvements to land, buildings, or equipment. Condition The District did not obtain prior approval for equipment acquisition or construction projects. This condition was noted for the following expenditures: Check 241010 Dated 12/27/2024 for $104,931.00 Check 240640 Dated 11/14/2024 for $147,398.90 Check 239597 Dated 8/30/2024 for $121,240.00 Context Per discussion with the District staff and review of program expenditures, there were 22 capital asset acquisitions during the year, we tested three of them for prior state approval. All three of these purchases were made without prior state approval. Cause The District did not properly submit for prior approval for equipment acquisition or construction until after the expenditure had been incurred and in some instances there were no submissions for prior approval. Effect The District may have purchased capital items that were not allowed by the State. Questioned Costs Undeterminable. Repeat Finding See prior year finding 2024-004. Recommendation We recommend the District to review all compliance requirements of federal programs to ensure they have procedures to ensure compliance with those requirements and for the requests for acquisition to be made timely and for the appropriate expenditure amount. Management’s Response See corrective action plan.
Criteria In accordance with 2 CFR 200.313(c)(1), non-Federal entities must maintain accurate equipment records for all federally acquired equipment. At a minimum, the equipment records must include: • A description of the equipment • A serial number or other identification number • The source of funding for the equipment, including the Federal Award Identification Number (FAIN) • Who holds title • The acquisition date and cost • The location, use, and condition of the equipment • Any ultimate disposition data, including date of disposal and sales price, if applicable In accordance with 2 CFR 200.313(d)(2) requires entities to verify the existence, current utilization, and continued need for federally funded equipment through physical inventories conducted at least once every two years and to reconcile those results with the equipment records. In accordance with 2 CFR 200.303, it is emphasized that entities maintain complete and accurate equipment listings to demonstrate proper safeguarding, tracking, and continued use of equipment acquired under Federal awards Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions Found We noted that the College does not maintain a complete and accurate equipment listing for federally acquired equipment. Specifically, the equipment listing did not consistently or correctly include all required data elements outlined in 2 CFR 200.313(c). Data elements that were missing from the listing included serial number, the source of funding for the equipment, including the FAIN, and the location. The data element that was incorrectly maintained on the equipment listing was acquisition date and cost as one instance was identified where the cost of acquiring an item on the equipment listing did not agree to the College’s system of record. Additionally, we noted the College does not have a process in place to reconcile the results of the bi-annual inventory count to the property record listing in order to reflect any changes or discrepancies resulting from the count. Cause The condition resulted from the absence of formally documented policies and procedures governing the maintenance and periodic review of the federally acquired equipment listing and the requirement of reconciling the federally acquired equipment to the property record listing after conducting a bi-annual physical inventory count. Also, the College has not implemented controls to ensure that required equipment information is consistently recorded, updated, and reviewed in accordance with Federal regulations. Possible Asserted Effect Failure to maintain a complete and accurate equipment listing can result in federally acquired equipment not being properly tracked, safeguarded, or used in accordance with Federal award requirements. The lack of accurate equipment records increases the risk of noncompliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Additionally, the inability to locate equipment, inaccurate equipment records and undetected loss or misuse of federally funded equipment. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be and was not a statistically valid sample. Repeat Finding The conditions found do not constitute a repeat finding from the prior year. Recommendation We recommend that the College establish and implement formal policies and procedures to ensure that a complete and accurate equipment listing for federally acquired equipment is maintained in accordance with 2 CFR 200.303 and 313. This should include ensuring that all required data elements are recorded, that the listing is periodically reviewed and updated, and that results of physical inventories are reconciled to the equipment records to support compliance with Federal award requirements. Views of Responsible Officials The College acknowledges that the federally acquired equipment listing did not include all required data elements outlined in 2 CFR 200.313(c) and did not reconcile it against the bi-annual physical inventory completed. To mitigate the risk of incomplete equipment records for federally acquired equipment, the College is formalizing policies and procedures to ensure required data elements are recorded and maintained, implementing a periodic review process to update the equipment listing, and establishing a reconciliation process to compare bi-annual physical inventory results to the property records and promptly resolve any discrepancies. These corrective actions are being implemented in fiscal year 2026.
FINDING 2025-006 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation had not properly designed a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation did not have any policies or procedures in place to ensure a detailed capital asset listing was completed for the audit period and that the listing contained all the required information. During the audit period, the School Corporation purchased equipment totaling $11,495,065 with COVID-19 - Education Stabilization Fund funds. However, the purchased equipment was not included on a capital asset listing or physical inventory. Due to the lack of a detailed capital asset listing, the equipment was not adequately safeguarded or maintained. The School Corporation should include the following required information in the detailed capital asset listing for each capital asset purchased with federal funds: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, and use and condition of the property. A capital asset listing is to be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The lack of internal controls and noncompliance were systemic issues throughout the audit period for the ESSER II and ESSER III grants. INDIANA STATE BOARD OF ACCOUNTS 26 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The School Corporation did not have policies or procedures in place to complete an inventory or maintain a fixed asset detail report. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, not all assets purchased with federal dollars were added to a capital asset listing. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information, new assets are properly added, and any discrepancies are reconciled. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Equipment and Real Property Management Federal Program and Specific Federal Award Identification CFDA Title and Number 84.031 Higher Education Institution Aid Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Per Uniform Guidance § 200.313, institutions are required to conduct a physical inventory of equipment acquired with federal funds at least once every two years and reconcile the results with property records. Conditions and Contexts The University did not provide evidence that a physical inventory of federally funded equipment was performed at least once every two years. Cause The University did not have adequate procedures in place to ensure that required physical inventories were performed and documented. Questioned Costs For the purposes of this condition, I have not questioned any costs. Effect The University may not be adequately safeguarding federally funded equipment, increasing the risk of loss, theft, or misuse. Repeat Finding No. Recommendation The University should implement procedures to ensure that physical inventories of equipment are conducted at least biennially and properly documented. Inventory results should be reconciled to equipment records, and discrepancies should be investigated and resolved. Management’s Response The University acknowledges the finding regarding the absence of documented evidence that a physical inventory of federally funded equipment was performed within the required two year period. We recognize that maintaining proper inventory controls is essential to safeguarding federal property in accordance with Uniform Guidance §200.313. Corrective Actions 1. Implementation of a Biennial Inventory Schedule: The University has established a formal schedule to ensure that physical inventories of federally funded equipment are conducted at least once every two years and are documented consistently. 2. Centralized Inventory Documentation: A computerized inventory tracking system has been implemented to store all inventory records, reconciliation reports, and supporting documentation to ensure availability for audit. 3. Reconciliation Procedures: Equipment inventory results will be reconciled to the University’s fixed asset and property records, with any discrepancies documented, investigated, and resolved. 4. Staff Training and Oversight: Staff responsible for property management will receive updated training on federal inventory requirements, documentation standards, and reconciliation procedures. Supervisory review has been added to ensure ongoing compliance. The University believes these actions will strengthen internal controls over equipment management and ensure compliance with federal regulations moving forward.
2025-004 – Equipment and Real Property Management Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Rural Health Outreach and Rural Network Development Program Assistance listing numbers: 93.912 Award year: 7/1/2024 – 6/30/2025 Criteria: According to 2 CFR 200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Additionally, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: During our audit, we noted that a complete listing of property, furniture, and equipment is not maintained in the accounting system. Additionally, SFRC did not perform a physical inventory of its property and equipment during fiscal year 2025 and there is no evidence supporting when the last physical inventory of property and equipment occurred as of June 30, 2025. Context: N/A Questioned Costs: None Cause: When the fixed asset module of the accounting system was implemented, fully depreciated items were not imported into the fixed asset module. Additionally, SFRC’s P&P Manual does not contain formal policies related to property, furniture, and equipment. Effect: The asset listing in the fixed asset module of the accounting system is not complete. Without an entity-wide physical inventory, there is an increased risk that individual items of property and equipment no longer exist, are damaged or impaired, or are being used by another program/location. Auditor’s Recommendation: SFRC should create policies and procedures over property, furniture, and equipment and add this information to its Accounting & Financial Management Policies and Procedures Manual. SFRC should also obtain the detailed asset listing from the audit and import this information into its fixed asset module so that the listing is complete going forward. Lastly, SFRC should perform a physical inventory of its property, furniture, and equipment and reconcile the result of this inventory to its fixed asset module. Management’s Response: Management reviewed existing accounting staffing structure, revised position descriptions, and have advertised to fill two of three open positions; Accounts Payable Specialist and Controller. Management feels with these revised position descriptions, more focus on accounting operations, procedures, and property and equipment management.
Finding No. 2025-044 Prior Year Finding: 2024-044 Federal Awarding Agency: U.S. Department of the Interior Impact: Material Weakness AL Number and Title: 15.605, 15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. DFG began efforts in FY 25 to address equipment and real property management weaknesses found in the prior year audit. However, at the end of FY 25, corrective action was incomplete. In FY 25, DFG did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increased the risk that FWC funded assets were not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increased the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should continue efforts to ensure procedures are developed and training is implemented so that FWC funded equipment, real property, and capital improvements are fully identified and are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.
1. FINDING NUMBER: 2025 - 003 2. THIS FINDING IS: New Repeat from Prior yearX Year originally reported? 2024 3. Federal Program Name and Year:Elementary and Secondary School Emergency Relief (ESSER) - 2024 and 2025 4. Project No.: 2024-4998-HL, 2024-4998-E3, 2025-4998-C3, 2025-4998-E2 5. AL No.: 84.425D, 84.425U, 84.425W 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Per 2 CFR 200.313(d)(2), "A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years." 9. Condition: The District was unable to demonstrate that a physical inventory was performed over the past two years. This is considered a material weakness in internal control over compliance and an instance of noncompliance over equipment and real property management. This is a repeat of finding 2024-003. 10. Questioned Costs: None 11. Context: The District has contracted with an outside vendor to perform the annual inventory but that inventory is not scheduled to take place until summer 2026. 12. Effect: Failure to perform an inventory of equipment purchased by the District could result in the inability to detect a potential loss of assets and noncompliance with federal regulations regarding the proper disposal of equipment purchased with federal funding. 13. Cause: The District did not timely engage its third party contractor to complete the capital asset inventory in time for the 2025 audit. 14. Recommendation: In addition to the District ensuring that the upcoming capital asset inventory is completed timely, we recommend that the District enact procedures to ensure future inventory updates are scheduled in a timely manner. 15. Management's response: A comprehensive physical inventory and asset verification is officially scheduled for completion during the Summer of 2026. This initiative will reconcile existing records with physical counts to ensure accurate financial reporting.
2025-002. Equipment and Real Property Management United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. In accordance with 2 CFR §200.313, non-federal entities receiving federal awards are required to have procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a federal award, until disposition takes place. This includes maintaining property records that include a description of the property, a serial number or other identification number, the source of funding for the property, including the Federal Award Identification Number (FAIN), and who holds title. In addition, it requires non-federal entities to track the acquisition date and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property acquired with federal awards must also be taken and the results reconciled with the property inventory records at least once every two years. Condition: The District did not include the capital expenditures for the “Early Childhood Educational Center (ECEC) Door Project”, “ECEC Roof Project”, “Front Vestibule Project”, and “Playground Equipment & Rubber Surfacing of Upper Play Area” that were paid with ARP ESSER 3 funds, in its current year’s capital assets inventory record. Additionally, certain items included as additions on the capital assets appraisal inventory report, such as classrooms equipment purchased with ARP ESSER 3 funds, did not match the amounts of expenditures in the District’s financial accounting application. Cause: The District did not have adequate procedures in place to identify capital-type expenditures paid with federal grant funds, which were recorded on the District’s books as purchased services, as capitalizable assets that should be added to the capital assets inventory report and tracked. Effect: Failure to include capital assets acquired with federal awards in the District’s capital assets inventory records could lead to improper or non-compliant procedures for assets inventory management and the subsequent disposal of those capital assets. Questioned Costs: None reported. Context: The District utilized federal grant awards to pay for permissible capital improvements which have been installed in instructional buildings that are leased by the District, the District recorded those expenditures as purchased services as per the pass-through entity, New York State Education Department’s guidance. The leasehold improvements incurred and acquired as of June 30, 2024 were omitted from but subsequently added to the District’s capital assets inventory reports; however, the leasehold improvements incurred and acquired during the 2024-2025 fiscal year were not included in annual capital assets inventory report. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should revise its existing procedures for compiling annual capital assets additions information to ensure equipment and capital-type expenditures purchased with federal funds are considered and evaluated for inclusion in the District’s annual capital assets inventory records. Views of Responsible Officials of Auditee: Management acknowledges the finding. The District’s Assistant Superintendent for Human Resources and Manager of Fixed Assets will review and update the existing District policy and procedures relating to the recording and tracking of capital assets purchased with federal funds.
2025-003. Special Tests and Provisions United States Department of Education, passed through New York State Department of Education: Education Stabilization Fund COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief ALN: 84.425U Criteria: Education Stabilization Fund (ESF) grant awards authorized under the federal Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and American Rescue Plan Act of 2021 (ARP) may be used for equipment purchases and capital expenditures, consistent with federal regulations 2 CFR §200.313 and 2 CFR §200.439. Subrecipients that use ESF funds for minor remodeling, renovation or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage compliance requirements, described in 2 CFR Part 200, Appendix XI - Compliance Supplement, Part 4, 20.001 Wage Rate Requirements Cross-Cutting Section. Condition: The District did not have formal contracts with the contractors for some of the construction projects funded with ARP ESSER 3 funds. Although the contractors indicated in their submitted proposals that their quoted price was based on prevailing wages, there was no legally-enforceable contractual language requiring the contractors and their subcontractors to comply with the federal Wage Rate Requirements clauses and DOL regulations. Cause: The District did not have procedures in place to ensure that capital construction projects have fully-executed contracts that include language requiring contractors to comply with federal Wage Rate Requirements, such as providing certified weekly payroll reports to support their invoices for payments. Effect: The lack of written contracts with Wage Rate Requirements clauses could expose the District to financial consequences if those contractors or their subcontractors are subsequently found to have violated the Wage Rate Requirements when performing their services for the District. Questioned Costs: None reported. Context: The District utilized ARP ESSER 3 funds to pay for its “Early Childhood Educational Center (ECEC) Door Project”, “ECEC Roof Project”, “Front Vestibule Project”, and “Playground Equipment & Rubber Surfacing of Upper Play Area”. The proposals submitted by contractors for the four projects stated that their quoted prices were based on prevailing wage rates, the District approved the proposals and issued purchase orders to the contractors; only one project has a fully executed agreement by the District and the contractor. However, neither the signed agreement for the one project nor the purchase orders issued for the other three projects contained requirements for the contractor to submit certified weekly payrolls as proof of compliance with the federal Wage Rate Requirements. Certified payrolls completed by the contractors and their subcontractors sometimes did not accompany the invoices submitted for payments, the District eventually requested and received all required certified payrolls from the contractors. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should review and revise its existing procedures for reviewing and approving capital construction projects to ensure that fully-executed contracts are obtained, and that such contracts contain clauses related to the compliance with the federal Wage Rate Requirements. Views of Responsible Officials of Auditee: Management acknowledges this finding. The District will review and update the existing procedures relating to capital-type construction projects.
Finding Number: 2025‐002 Repeat Finding: Yes, 2024‐002 Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425U Federal Agency: U.S Department of Education Federal Award Number: S425U210038 Pass‐Through Agency: Arizona Department of Education Questioned Costs: n/a Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Equipment and Real Property Management Criteria District management is responsible for establishing and maintaining internal control over the District’s accounting records and financial reporting in order to meet financial reporting objectives of the District. CFR 200.313 requires a physical inventory, of property purchased with federal funds, must be completed and reconciled with the property records every two years. The Uniform System of Financial Records (USFR) prescribes required procedures in the areas of capital assets including an inventory at least every three years. Condition The District lacked adequate controls over capital assets purchased with federal funds. Cause District and federal policies and internal controls in place were not always operating effectively or were not always followed. Effect The District was not in compliance with CFR 200.313. Context During our review of the District’s capital assets, we noted that the District has not performed a physical inventory and reconciliation over stewardship and capital assets since fiscal year 2017. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should appoint an individual to ensure that a physical inventory of property purchased with federal funds is conducted and reconciled back to the property records every two years. Views of Responsible Officials See Corrective Action Plan.
Inadequate Internal Controls over Grant-Funded Equipment Maintenance and Inventory and Noncompliance with Biennial Inventory Count Requirement Name of Federal agency: U.S. Department of the Interior Name of applicable pass-through entity: State of Alaska, Department of Community and Economic Development Federal program: National Petroleum Reserve – Alaska Assistance listing number: 15.439 Federal Award Number(s): Various Federal award period: July 1, 2024 - June 30, 2025 Criteria: According to 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with property records at least once every two years and 2 CFR 200.313(d)(4) states that adequate maintenance procedures must be developed to keep the property in good condition. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition Found: The Borough was unable to provide sufficient and appropriate evidence, including complete documentation, to demonstrate compliance with the biennial physical inventory requirement for grant funded equipment under the Equipment and Real Property Management compliance requirements. Specifically, no documentation was available to support whether a physical inventory was conducted in FY2024, and the FY2025 inventory was incomplete. Additionally, there was not a control designed to ensure equipment maintenance was performed as scheduled. Cause: While the Borough had an established general policy regarding physical inventory counts and equipment maintenance, the policy lacked sufficient detail to ensure consistent implementation. Specifically, the policy did not clearly define roles and responsibilities for conducting inventory counts, establish procedures for performing the inventory counts and the timing of such counts, or identify the individuals responsible for reviewing and approving inventory results and maintenance logs. In addition, organizational changes during FY2024, including the separation of the Administration and Finance departments, contributed to a breakdown in the continuity of inventory management functions. Staff turnover and a lack of training for new employees further contributed to the insufficient execution of required inventory management procedures. Possible Asserted Effect: Failure to establish effective internal controls over the biennial inventory count and maintenance requirements increases the risk that grant-funded equipment may be lost, misappropriated, or not properly accounted for, which could result in questioned costs, inaccurate financial reporting, and noncompliance with federal award requirements. Questioned Costs: None Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend the Borough establish internal controls to ensure biennial inventory counts for grant-funded equipment are properly conducted, documented, and formally reconciled with the property records and to ensure equipment is kept in good condition. Views of Responsible Officials: Management concurs with the finding. In response, management will continue to implement additional controls to strengthen compliance with equipment and real property management requirements, including improvements to inventory procedures, documentation practices, and oversight. The Department of Finance will work in coordination with the Department of Administration to provide training to all relevant departments on federal guidelines and compliance requirements related to assets purchased with federal grant funds. Management will continue to monitor these controls and take further corrective action, as necessary, to ensure ongoing compliance with applicable federal requirements.
Management is responsible for maintaining controls over capital assets in accordance with 2 CFR 200.313 including updating capital asset schedules for assets purchased with Federal award monies.
2025-003– Significant Deficiency in Internal Controls over Equipment and Real Property Management; Noncompliance with Equipment and Real Property Management Condition: A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). Criteria: Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). Cause: Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect: Federal interest in property are lost or inadequately tracked. Recommendation: We recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel.. Views of Responsible Officials and Planned Corrective Actions: The Organization will update its property records to include all required information. Additionally, the Organization plans to document its performance of a physical inventory count and related reconciliation on an annual basis. Repeat Finding: Yes, 2024-003
2025-002 - Equipment/Real Property Management Federal Program Information: Department of Education – Special Education Cluster (IDEA) CFDA – 84.027/84.173 Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 Internal Controls; 2 CFR 200.313(d)(1)(2)(3). Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that all appropriate equipment and real property management requirements were in place. Cause: Unknown Effect: The Supervisory Union may not be consistently following all appropriate equipment and real property management standards and procedures. There was an instance where the asset purchased equipment did not have a property record and was not recorded in the asset list. Identification of Questioned Costs: None identified. Context: Of the one, and only equipment purchase identified during FY25, there was no property record and it was not recorded on the asset list. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Supervisory Union implements controls to ensure that it follows all appropriate equipment and real property management standards and procedures. We also recommend that the Supervisory Union review its equipment and property policy to ensure that it is updated and complete.
Federal Agency: U.S. Department of Education Federal Program Name: Charter Schools Assistance Listing Number: 84.282 Federal Award Identification Number and Year: S282A230008-2025 Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Number(s): 2025-678022-DPI-WCSPWC1-360 Award Period: 7/01/2024-6/30/2025 Type of Finding: Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria or specific requirement: 2 CFR Part 200.313 requires property and equipment purchased with federal funding to be safeguarded and maintained, and for the organization to maintain property records that include information such as the source of funding, percentage of federal agency participation in the cost, use, and condition. Condition: All equipment and real property that was acquired with federal funding had no policy in place to safeguard and maintain them, and property records that did not include the necessary information. Questioned costs: None Context: Four purchases of equipment and real property (three buses and a fence) were made with federal funding. There was no policy to properly safeguard and maintain them, and property records did not include all necessary information. Cause: Management Oversight Effect: The effect of not having an policy for safeguarding, maintaining, and recording property and equipment purchased with federal funding would be noncompliance with 2 CFR 200.313. Repeat finding: No Recommendation: It is recommended that the School establish a policy and procedure for safeguarding and maintaining real property and equipment purchased with federal funding, and develop property records that include all required information. Views of responsible officials: There is no disagreement with the audit finding. Management will work with their staff to adopt the relevant policies.
Information on the federal program: Subject: Education Stabilization Fund – Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425U Federal Award Numbers: S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: In our testing of four equipment selections, we noted the School Corporation did not add the capital asset to the capital asset listing. During the testing of equipment acquisitions, it was noted the School Corporation had not updated the capital asset ledger as of June 30, 2025 for equipment acquisitions made during the period under audit. Additionally, the capital asset ledger does not include required information, such as designation of federal funding, date acquired, capital asset categorization and useful life. Identification as a repeat finding: Yes, Finding 2023-004 Recommendation: We recommend that the School Corporation's management establish a system of internal controls related to the grant agreement and Equipment and Real Property Management compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING REFERENCE NUMBER 2025-005 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.425R) COVID-19 EDUCATION STABILIZATION FUND: CORONAVIRUS RESPONSE AND RELIEF SUPPLEMENTAL APPROPRIATIONS ACT, 2021 – EMERGENCY ASSISTANCE FOR NON-PUBLIC SCHOOLS (CRRSA EANS) (ALN – 84.425U) COVID-19 EDUCATION STABILIZATION FUND: AMERICAN RESCUE PLAN – ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ARP ESSER) (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – IMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A220003 (07/01/2023 – 09/30/2023); H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025); S425R210053 (06/28/2021 – 03/31/2025); S425U210029 (03/24/2021 – 03/28/2026); S938A180002 (04/26/2018 – 09/30/2025) COMPLIANCE REQUIREMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.313, establishes that procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. STATEMENT OF CONDITION As part of our procedures on equipment requirements, we requested an inventory of equipment from the PRDE as of June 30, 2025. No inventory was taken since 2019. The PRDE provided a list of all additions made during the fiscal year. In the list of additions provided to us, we found that a total amount of $10,356,037.76, classified as programs and licenses, should not be capitalized as equipment because they have a useful life of less than one year. We selected a sample of forty (40) units for the IDEA Cluster, to determine that the items were properly safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Eight (8) items do not have the assigned person updated. 2. One (1) was not physically observed because is a program license software. 3. Two (2) items don’t have the location updated and no transfer documentation was provided. 4. Two (2) items the description does not agree with the property observed. We selected a sample of forty (40) items for the Education Stabilization Fund Programs, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2 One (1) item does not have the location updated and no transfer documentation was provided. 3 One (1) item does not have the assigned person and location updated and no transfer documentation was provided. 4 One (1) item does not have the assigned person updated, in addition the property is not in use because it is damaged and no updated in the records was performed to reflect the condition of the property. 5 One (1) of the selected items represents the acquisition of eighty-two (82) air conditioning units for several classrooms and only one (1) property number was assigned to the purchase, therefore all units have the same property number. 6 One (1) of the selected items could not be shown at the location because the custodian is on sick leave. As an alternative procedure, a photograph of the computer/laptop was sent to us as evidence, but it does not show the tag or serial number for validation. We were able to observe that the equipment exists and is in good condition. We selected a sample of forty (40) items for the Restart Program, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2. Twelve (12) items included in the assigned person the name of the public or private school as the custodian. 3. Five (5) items do not have the location updated and no transfer documentation was provided. From these items, four (4) were servers and backup batteries that were purchased through a memorandum of understanding between the PRDE and the Puerto Rico Police Department. The equipment was not in school or in custody of a person from the PRDE, instead it is in custody of a Sargeant of the Puerto Rico Police Department. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Each school Principal conducted an equipment count, but it was not reviewed, and not all schools did so. No inventory has been conducted since 2019. The identified deficiencies constitute a systemic problem. Items purchased during fiscal year under audit did not properly identify the custodian, location, description, and no proper tracking of transfer of equipment is maintained in the PRDE. The sampling was a statistically valid sample. STATEMENT OF CAUSE PRDE has not been able to work with the inventory and update it as of June 30, 2025. In addition, the Property Department does not have procedures in place in order to identify incomplete records, unidentified dispositions, or transferred equipment. POSSIBLE ASSERTED EFFECT It was not possible to validate that the PRDE complies with the requirements established by the Federal regulation related to the maintenance of records of equipment acquired with Federal funds. In addition, deficiencies were noted in the usage and proper safeguard of the equipment purchased. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-006). RECOMMENDATIONS We recommend that the PRDE carry out an inventory and reconcile it with the records maintained by the PRDE. In addition, internal controls must be implemented to ensure that only equipment that is necessary for the operation of the programs is purchased. In addition, the use of this equipment must be monitored, so that its installation and use are followed up, as well as the transfer of equipment and changes to the property records.
Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed Federal Programs ALN 20.106, Airport Improvement Program Name of Federal Agency U.S. Department of Transportation - Federal Aviation Administration Category Internal Control/Compliance; Significant Deficiency Compliance Requirement Equipment and Real Property Management Criteria 2 CFR 200.313 (d) (1) establishes that property records must be maintained and should include a description of the property, a serial number or other identification number, the source of funding for the property, who holds the title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. 2 CFR 200.313 (d) (2) establishes that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. 2 CFR 200.313 (d) (3) establishes that a control system must be developed to ensure adequate safeguard to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. 2 CFR 200.313 (d) (4) establishes that adequate maintenance procedures must be developed to keep the property in good condition. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 95 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Criteria – (continued) 2 CFR 200.313 (d) (5) establishes that if the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Property Division Manual No. 500 Section .12 (A) (1) establishes that the General Services Manager together with the Property Division Supervisor will be responsible to take an annual physical inventory. Also, will be responsible for maintaining files to evidence the annual physical inventory taking. Property Division Manual No. 500 Section .12 (A) (4) establishes that Property Division Supervisor will be responsible for investigating and determining the changes that correspond to the founded differences as a result of inventory. Property Division Manual No. 500 Section .16 (1) establishes that all equipment acquired with federal funds will be properly identified and made reference of sourced funds, percentage of federal participation and number of agreement or grant, as apply. Condition While obtaining our understanding of the policies and procedures in place at the Authority’s office in relation to the management of property and equipment, management represented to us that the required physical inventory has not been performed by the Authority’s Property Division personnel during the last seven years as required. Cause The Authority’s lack of personnel has been the principal cause for not taking the physical inventory of property and equipment, as required by federal regulations. Also, due to the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), a total of 127 eligible employees of the Authority took advantage of the benefits from the incentivized program under said act. In addition, some personnel have simply resigned from their occupied position and left the Authority willingly. The significant reduction in experienced personnel, particularly in key financial functions, occurred prior to the completion of fiscal year-end closing procedures. The Authority did not have an adequate succession or transition plan to ensure continuity of operations and effective internal control during this workforce reduction. Consequently, the Authority experienced disruption in the Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 96 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Cause – (continued) performance of key financial reporting processes and became increasingly reliant on external consultants to complete certain closing entries and procedures. Effect The lack of a periodic physical inventory procedures does not allow the Authority the timely identification of issues related to federally acquired property and equipment in order to take needed actions to prevent or correct inadequate condition. The Authority is exposed to the risk of possible unauthorized use, misappropriation and disposition of property without being noticed due to the lack of internal controls and proper supporting accounting records. Such condition exposed the Authority not to take any action to recover any suffered loss as reconciliation of physical assets to accounting records could not be made. Context This finding was present in the prior year single audit report as finding 2024-004 and 2023-004. Corrective action plan from the prior year single audit report (issued September 29, 2025) stated that during fiscal year 2025‐2026 the Human Resources area will conduct an analysis and evaluation of all vacant positions to determine which ones can be hired. Once this analysis is completed, management will obtain the required approval to hire additional personnel to address the physical inventory observation and counting. Therefore, the condition is still present as of June 30, 2025. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2024-004. Questioned costs Could not be determined. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-004 – Improvement required over the equipment and real property management for which the physical inventory observation over property has not been performed – (continued) Recommendation We recommend management to appoint personnel to perform this task. Such personnel might come from contracting outsourced third-party providers or hiring new or training current personnel to assist in the capital assets inventory taking procedures. In addition, we recommend that management enforce the procedures to be followed by the Property Division to mitigate the risks of misappropriation. This could be denominated as a special project to be included as part of the subsequent fiscal year budget and be contracted with a third party as the benefits overweight the risk of loss. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.
Finding No.: 2025-003- Equipment – Material weakness and material non-compliance Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria Institutions with federally acquired research and development equipment must adhere to specific guidelines outlined in 2 CFR 200.313. This regulation mandates that entities conduct bi-annual inventory counts of federally acquired equipment to ensure accurate tracking and accountability. It requires maintaining detailed records of all equipment, including acquisition date, cost, location, and current status, to reflect any changes or discrepancies following each inventory count. Additionally, the regulation specifies procedures for the appropriate disposal of federally acquired equipment that is no longer needed or has reached the end of its useful life. Entities must request disposal instructions from the federal awarding agency and ensure that disposal methods comply with federal regulations, including obtaining necessary approvals and documenting the disposal process. Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions Found During our testing over equipment, we identified that the College did not conduct an inventory count in the fiscal year under audit or the preceding fiscal year. During our testing over equipment dispositions, we noted that the College maintains a listing of equipment disposals, this listing did not include the date of disposition. Additionally, management was unable to provide documentation demonstrating that during the disposition of equipment the College requested disposition instructions from the federal awarding agency, when required by the terms and conditions of the award and was unable to provide supporting documentation of the individual disposals. Cause The cause of this condition was that the College did not follow its internal policies to conduct a physical inventory count, which contributed to the inability to track the specific timing of equipment retirements. Furthermore, the College lacked formally written policies and procedures governing the disposal of federally acquired equipment to ensure the disposal process, including obtaining necessary approvals, is documented and executed in compliance with Uniform Guidance. Possible Asserted Effect Improper disposal practices and the failure to perform a physical inventory count compromise the integrity of inventory management. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management perform a thorough physical inventory audit to locate all equipment and update the master equipment listing with accurate details, including current locations and statuses. Additionally, we recommend the institution review and regularly circulate formal policies and procedures for the appropriate disposal of non-functional or obsolete equipment. This should include obtaining necessary approvals and documenting the disposal process as per federal guidelines and federal awarding agency instructions. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.
2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.
Criteria - Federal regulations require that equipment and real property acquired under a federal award be properly documented in accordance with 2 CFR §§200.310–200.313 and applicable program requirements. "Equipment acquired under a federal award must be used for the authorized purposes of the project during the period of performance, or until the property is no longer needed for the project. A HSA may not dispose of, replace, or encumber title to equipment without prior ACF approval (45 CFR section 75.319; 45 CFR section 75.308(c)(1)(xi))." "Property records must be maintained for equipment acquired under a federal award that includes a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), who holds the title, the acquisition date, and cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired the location, use, and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition and Context - The audit identified gaps in documentation and centralized tracking of equipment and real property acquired under federal awards. Certain historical additions and disposals were not fully documented in accordance with Uniform Guidance, and some current-year asset activity was not captured or reconciled in the property records. Questioned Costs - $14,410 relates to documentation and classification issues identified during the audit. Cause - Property management policies did not fully incorporate current Uniform Guidance requirements, and asset tracking relied on manual processes that were handled across multiple areas and would benefit from more consistent central oversight. Effect - Compliance risk: Noncompliance with property standards increases the risk of disallowed costs, clawbacks, or additional restrictions by the Federal agency. Reporting risk: The Schedule of Expenditures of Federal Awards (SEFA) and related disclosures may be incomplete or inaccurate if property‑related terms and conditions are not followed, affecting low‑risk auditee status evaluations under Subpart F. Recommendation - Update property management policies to mirror requirements in 2 CFR §200.313, §200.311, and §200.310, including explicit steps to (a) verify authorized use, (b) prohibit encumbrances without prior approval, (c) document and seek disposition instructions when no longer needed, and (d) maintain insurance equivalency. Provide targeted staff training and oversight. Views of responsible officials - Management concurs with the finding and views it as an opportunity to modernize property management practices. Corrective actions are underway to strengthen documentation, training, and oversight.
Finding Number: Finding 2025-006 Program Name: Head Start and Early Head Start Pass Through Agency: N/A Type of Finding: Other Matter, compliance a. Criteria or Specific Requirement: Physical Inventory Observation: Under 2 CFR 200 200.313(4)(2), a physical inventory of property must be taken at least once every two years. The results should be reconciled with the general ledger. b. Condition: The Organization has not performed a physical inventory in the last two years. c. Context: Recipients of Federal grants are required to perform physical inventory at least once every two years. d. Questioned Costs: None identified. e. Cause: The Organization has experienced turnover and, as a result, did not perform the physical inventory. f. Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, the Organization may be overstating or understating capital assets in its financial statements. g. Repeat: Yes. h. Recommendation: The Organization should maintain its documentation of an entitywide physical inventory of its capital assets performed every two years. Once completed, the listing should be reconciled to the general ledger control totals and the control totals adjusted to the balances supported by the physical inventory results. The Organization should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis.
Finding No. 2024-001: Equipment and Real Property Management Policy U.S. Department of Housing and Urban Development, CFDA 14.231, Emergency Solutions Grant Type of Finding: Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Non-compliance Criteria: Per 2 CFR 200.313 the entity must use its own documented procedures surrounding the acquisition, safekeeping, maintenance, and disposal of all equipment and real property acquired with federal awards. Condition: When testing and evaluating the Organization’s compliance with documented policy surrounding the equipment and real property management, it was determined that the Organization does not have a documented policy. Cause: Program administrative staff are not familiar with equipment and real property management requirements of Federal grants and contracts. Effect/Context: As a result, the entity could inadvertently engage in an equipment or property transaction for which the appropriate standards were not followed. Questions Costs: None Repeat Finding from Prior Year: Yes Recommendation: Coachella Valley Rescue Mission should document and implement policy and procedures to comply with the standards surrounding equipment and real property management standards. Management’s Views and Corrective Action Plan: See the accompanying Management’s Views and Corrective Action Plan, which are considered part of this report.
FINDING 2024-001 Subject: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): 3-18-0047-033-2024 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context Detailed property records are to be maintained when equipment having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds $5,000 is purchased with federal awards. The property records should contain the equipment description (including serial number or other identification number), source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. One piece of equipment was purchased with Airport Improvement Program funds totaling $216,250. However, the equipment was not included in the Authority's property records (capital asset listing), nor did the records contain all the required information listed above. In addition, the Authority did not perform a complete physical inventory within the last two years as required. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause Internal controls were not designed to ensure compliance with equipment management requirements as the Authority was unaware of the procedures needed. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Authority's management strengthen its system of internal controls to ensure compliance with equipment management requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding No. 2024-001: Equipment and Real Property Management Policy U.S. Department of Housing and Urban Development, CFDA 14.231, Emergency Solutions Grant Type of Finding: Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Non-compliance Criteria: Per 2 CFR 200.313 the entity must use its own documented procedures surrounding the acquisition, safekeeping, maintenance, and disposal of all equipment and real property acquired with federal awards. Condition: When testing and evaluating the Organization’s compliance with documented policy surrounding the equipment and real property management, it was determined that the Organization does not have a documented policy. Cause: Program administrative staff are not familiar with equipment and real property management requirements of Federal grants and contracts. Effect/Context: As a result, the entity could inadvertently engage in an equipment or property transaction for which the appropriate standards were not followed. Questions Costs: None Repeat Finding from Prior Year: Yes Recommendation: Coachella Valley Rescue Mission should document and implement policy and procedures to comply with the standards surrounding equipment and real property management standards. Management’s Views and Corrective Action Plan: See the accompanying Management’s Views and Corrective Action Plan, which are considered part of this report.
FINDING 2024-001 Subject: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): 3-18-0047-033-2024 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context Detailed property records are to be maintained when equipment having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds $5,000 is purchased with federal awards. The property records should contain the equipment description (including serial number or other identification number), source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. One piece of equipment was purchased with Airport Improvement Program funds totaling $216,250. However, the equipment was not included in the Authority's property records (capital asset listing), nor did the records contain all the required information listed above. In addition, the Authority did not perform a complete physical inventory within the last two years as required. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause Internal controls were not designed to ensure compliance with equipment management requirements as the Authority was unaware of the procedures needed. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Authority's management strengthen its system of internal controls to ensure compliance with equipment management requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: Airport Improvement Program - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program Assistance Listings Number: 20.106 Federal Award Number and Year (or Other Identifying Number): AIP 3-18-0059-040-2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 DELAWARE COUNTY AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Authority had not properly designed a system of internal controls in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with the Airport Improvement Program grant award to ensure adequate safeguards are in place to prevent loss or damage of items. The Authority used federal funds to purchase a snow broom costing $300,551. The equipment was included in the capital asset listing of the Authority; however, it did not include the proper identifying information. The Authority's capital asset listing did not include the following required information: The use and condition of the property. The percentage of federal participation in the project costs for the federal award under which the property was acquired. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. INDIANA STATE BOARD OF ACCOUNTS 14 DELAWARE COUNTY AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The Authority was unaware of the requirements to track the percentage of federal participation in the project costs for the federal award under which the property was acquired and the use and condition of the property. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, capital assets purchased with federal dollars were not properly added to the Authority's capital asset listing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Authority establish a proper system of internal controls and develop policies and procedures to ensure capital asset records include all the necessary information. We also recommended the Authority ensure they have a proper understanding of all grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Information on the federal program: Subject: Assistance to Firefighters Grant Program – Internal Controls Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Program Assistance Listing Number: 97.044 Federal Award Numbers and Years (or Other Identifying Numbers): EMW-2022-FG-08560 Pass-Through Entity: N/A Compliance Requirement: Equipment and Real Property Management Audit Finding: Material Weakness Criteria: 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management Requirements compliance requirements. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system place the City at risk of noncompliance with the grant agreement and the compliance requirements. The lack of internal controls could have allowed misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs: There were no questioned costs identified. Context: The capital asset listing provided by the City did not include any of the assets purchased with the Assistance to Firefighters Grant program funds. The fire station has a system in place to track their capital assets, however, upon review of the capital asset listing, it did not include the assets purchased with the grant noted above. Further, the capital asset listing did not include information such as the estimated useful life of the equipment nor did it include the funding source used to purchase the equipment. The amount of equipment purchases with the Assistance to Firefighters Grant funds, for the year ended December 31, 2024, was $815,546. Identification as a repeat finding, if applicable: No. Not a repeat finding. Recommendation: We recommend the City update the capital asset listing at least annually to include all equipment and real property acquisitions and review for potential capital asset dispositions. The capital asset listing should include all required information to track capital asset acquisitions purchased with federal funding. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-001 Subject: Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs Assistance Listings Number: 20.106 Federal Award Numbers and Years (or Other Identifying Numbers): 3-18-0061-19-2020, 3-18-0061-24-2023, 3-18-0061-25-2023, 3-18-0061-26-2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context Airport Improvement grant funds may be used to acquire real and personal property, supplies, and equipment. Equipment purchased with Airport Improvement funds requires management among other things to maintain property records, complete a physical inventory, safeguard against loss, and properly maintain the equipment. A property record or capital asset listing, which would include the following attributes, is to be maintained for assets purchased. • A description of the property. • A serial number or other identification number. • The source of funding for the property (including the federal award identification number (FAIN)). • Who holds title. • The acquisition date. • Cost of the property. • Percentage of federal participation in the project costs for the federal award under which the property was acquired. • The location. • Use and condition of the property. Although the County purchased multiple land acquisitions using the Airport Improvement Program funds, which exceeded the County's capitalization threshold, the land acquisitions were not included on an inventory listing. Additionally, the County did not complete a capital asset inventory for airport assets every two years as required. INDIANA STATE BOARD OF ACCOUNTS 14 HENRY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and the cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale priced of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or must be investigated. . . ." Cause A proper system of internal controls was not designed by the management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The County did not add the acquisitions to the property records as they were unaware that this should be added to property records. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. INDIANA STATE BOARD OF ACCOUNTS 15 HENRY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) As a result, not all required elements of the property record were documented for assets acquired with Airport Improvement funds. All assets were not added to the property records. Noncompliance with the provisions of federal regulations and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure capital assets purchased with federal funds are included on a capital asset ledger and that a physical inventory is performed every two years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Equipment and Real Property Management Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii Assistance Listings Number: 14.228 Federal Award Number and Year (or Other Identifying Number): B22DC180001 Pass-Through Entity: Indiana Office of Community and Rural Affairs Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The Town had not properly designed a system of internal controls in order to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with federal grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. The Town used federal funds to pay for renovation work on the North Lift Station Building costing $1,064,127. The building renovations were included in the capital asset listing of the Town; however, it did not include the required property identifying information. The Towns's capital asset listing did not include the following required information: • The use and condition of the property • The percentage of federal participation in the project costs for the federal award under which the property was acquired. • Source of funding for the property (including the federal award identification number [the FAIN]) • The location of the property The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 14 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause The Town did not have adequate internal controls in place to ensure personnel were aware of the federal requirements for assets. The Town was unaware of the requirements regarding identifying information for assets purchased with federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars were not properly identified in the Town's asset listing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information. We also recommended the Town ensure it has a proper understanding of all grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Information on the Federal Program: Assistance Listing Number 81.086— Upper Midwest Inter‐Tribal EV Charging Community Network. Compliance Requirement: Equipment and Real Property Type of Finding: Noncompliance and material weakness in internal control over compliance. Criteria: 2 CFR 200.313 item (d): Property Standards. Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Condition: For real property and equipment purchased with federal funding by Native Sun, adequate records and agreements were not kept. This included a lack of a listing as referenced above and a lack of agreement with beneficiaries of real property and equipment to ensure they remained in compliance with federal standards. Causes: The Organization was not retaining adequate records of equipment transferred to beneficiaries. Effect or Potential Effect: There could be equipment or real property purchased with federal funding that is not adequately accounted for or used outside of the bounds of the designated project use. There could also be equipment or real property unaccounted for or disposed of in a way that is not in compliance with federal standards. Large purchases of equipment including an electric bus and a bus garage lacked agreements that ensured that these items were accounted for in compliance with federal standards. Questioned Costs: None Context: The Organization did not have adequate controls in place to ensure that two of eight equipment and real property purchases tested were in compliance with federal guidelines. In addition, the organization was not able to provide an equipment list which included all required information at the beginning of the single audit process. Repeat Finding: No Recommendation: We recommend the Organization maintain a detailed listing of all real property and equipment purchased with federal funding that adheres to the criteria noted in 2 CFR Part 200. We also recommend the Organization have signed agreements dictating the treatment of real property and equipment with beneficiaries of all items that ownership is transferred from the Organization to ensure compliance. Views of Responsible Officials: Agree.
Finding 2024-002 (Significant Deficiency) Program(s): Conservation, Research, and Development Federal Agency: Department of Energy AL #: 81.086 Federal Award Identification Number and Year: Various – See SEFA Pass-through Entity: Various – See SEFA Type of Compliance Finding: F) Equipment and Real Property Management Criteria Per 2 CFR section 200.313(d)(2) a physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. Condition/Context During our audit of the Organization’s fiscal year ended December 31, 2024 federal award program, we noted the Organization did not conduct the physical inventory, as required. Cause Organization management had scheduled a property inventory for 2024 (no physical inventory was planned or completed in 2023). However, due to turnover of two key personnel charged with leading this work, they have no records of the results. They are completing one in 2025. Effect Management is not in compliance with the requirements of the federal award. Questioned Costs None Is the finding a repeat finding No Recommendations We recommend that Management perform the required physical inventory, as soon as possible Views of Responsible Officials / Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization’s letterhead.
Finding 2024-003 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Equipment and Real Property Management Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Federal Award Number: N/A Pass-Through Entity: N/A Compliance Requirements: Equipment and Real Property Management Audit Finding: Material Weakness, Noncompliance, Qualified Opinion Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)...." 2 CFR 200.313(d)(1) states in part: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property" Condition: An effective internal control system was not in place at the District to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. Cause: Management had not established a system of internal control that would have ensured proper procedures are followed to comply with the Equipment and Real Property Management compliance requirements. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected and the proper tracking of assets acquired with federal funds was not taking place. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the District. Questioned Costs: There were no questioned costs identified. Context: The District did not maintain an updated asset listing that reflects the construction in process balance related to the project funded with federal funds. There was approximately $25.0 million of disbursements from federal funds related to the project as of December 31, 2024. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Recommendation: We recommend that the District’s management establish controls related to the grant agreement and the Equipment and Real Property compliance requirement to ensure that assets being purchased with federal funds are added to the capital asset listing and all required information is maintained on the capital asset listing. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-004 Subject: Water and Waste Disposal System for Rural Communities - Equipment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): 1780-12 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The Town had not properly designed and implemented a system of internal controls to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. A property record or capital asset listing is required to be maintained for all equipment purchased with federal grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. The Town disbursed federal funds for its Sewer Construction project and added $1,600,438 to its capital asset records in 2024 noted as "Infrastructure." None of the required information, including description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the federal agency contribution towards the original purchase, the location, etc., was included in the Town's property/asset records. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF NEW MARKET SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return." Cause The Town was unaware of the requirements regarding identifying information for assets purchased with federal funds. The Clerk-Treasurer is new to the position and is still working to implement internal controls over the Town's federal grant programs. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, assets purchased with federal dollars were not properly identified in the Town's asset listing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure asset records include all the necessary information for assets purchased with federal funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-002 Disposition of Federally Funded Assets Year Finding Originated: 2024 Criteria: In accordance with 2 CFR 200.313(e), when original or replacement equipment acquired under a federal award is no longer needed for the original project or program, the non-federal entity must request disposition instructions from the federal awarding agency if the item’s fair market value exceeds $10,000. Additionally, if the asset is sold, the federal awarding agency is entitled to an amount calculated by multiplying the percentage of the federal agency’s contribution toward the original purchase by the current market value or proceeds from the sale. Condition: The Parish disposed of equipment purchased under a U.S. Department of Homeland Security grant (ALN No. 97.039) without following the disposition procedures described above. Cause: In April 2024, the Parish finalized the sale of its sewer assets held in the Parish’s Utility Fund. The final asset listing included assets that were acquired by the Parish between the time the initial sale proposal was made, and the final sale was completed. The assets included equipment purchased with federally funded grants. The Parish did not properly contact the federal agency prior to the sale of the assets to request disposition instructions from the federal awarding agency. Effect: The Parish may not be compliant with 2 CFR 200.313(e). Recommendation: We recommend that Parish implement procedures to ensure that surplus assets are identified as federally funded prior to disposition or sale, and the Parish request disposition instructions from the federal awarding agency as required by 2 CFR 200.313(e). Views of responsible officials: See management’s corrective action plan following the summary of noncompliance items.
FINDING 2024-003 Subject: Highway Planning and Construction - Equipment and Real Property Management Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Number and Year (or Other Identifying Number): DES #9981680 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context A property record or capital asset listing is required to be maintained for all equipment, property improvements, and property purchased with the Highway Planning and Construction grant awards to ensure adequate safeguards are in place to prevent loss or damage of items. In addition, a complete physical inventory of the property must be taken every two years and reconciled with the detailed listing. The capital asset listing is to include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The County purchased $734,389 of right-of-way for the Veterans Memorial Trail project. The project had a 20 percent local match; thus, the Highway Planning and Construction grant portion was $587,511. The right-of-way purchase should have been recorded as capital assets purchased with 80 percent federal funding. However, the County did not include the right-of-way purchased in the capital asset listing. The lack of internal controls and noncompliance were isolated to DES #9981680. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of dunking for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Cause Effective internal controls were not in place to ensure that all capital assets purchased with federal funds, including rights-of-ways, were added to the County's capital asset listing. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish a proper system of internal controls that would ensure compliance with the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Equipment Management Grantor: Various Cluster: Research & Development Award Names: Various Award Numbers: Various Assistance Listing Number: Various Award Year: Various Criteria 2 CFR 200.313 (d)(1-2) indicates that a physical inventory of federal equipment must be taken and the results reconciled with property records at least once every two years. Additionally, accurate property records must be maintained which include various identifying information, such as the location, use and condition of the property and any ultimate disposition data, including the date of disposal and sale of the property. Condition In testing the Company’s conformity with the compliance requirements for equipment management, we selected 25 pieces of equipment from the detailed listings provided to physically inspect. Additionally, in order to test the completeness of the detailed listings, we selected 25 pieces of equipment from the “floor” and traced these to the detailed listings provided. Through our testing, we noted the following: • Two pieces of equipment out of the 25 selections made from the detailed listings for physical inspection were incorrectly included in the listings. o One asset was moved to another institution with the associated principal investigator. The asset was not included in the list of equipment approved for the transfer with the departure of the principal investigator. The department continued to certify the asset was in service after the transfer of the asset. The acquisition price of the asset was $6,023.36. o The second asset was acquired in 2008 and sold in 2023, at the direction of the principal investigator, with the proceeds of the sale allocated to a non-federal internal research fund. The department continued to certify the asset was in service after the disposal of the asset. Cause For the first asset that was improperly included in the detailed listing, two pieces of the same equipment were purchased together, and one of the two pieces of equipment was retained, which caused the department to inadvertently certify that both assets were still in service. Further, the asset was not included on the list of equipment approved for transfer with the principal investigator’s departure from the Company. For the second asset, the principal investigator in charge of the equipment is in the process of leaving the Company, and the department is moving or disposing of his equipment. The equipment management team was waiting until the Investigator’s space was completely cleared before updating the inventory listings. Effect The process around the transfer and/or disposal of equipment when there is a transfer of an award, or a transfer of the principal investigator is not properly reflected in the Company’s inventory records. Questioned Costs There are no questioned costs. Under the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6306, NIH permits institutions to obtain title to equipment for support of basic or applied scientific research without further obligation to the Federal government. NIH has the right to require transfer of title to equipment with an acquisition cost of $5,000 or more to the Federal government within 120 of the completion of the award. The associated award ended prior to FY24, so the title transfer period has expired. Therefore, the equipment disposal did not result in questioned costs. Recommendation We recommend that the Company provide additional training to the principal investigators and other grant personnel focusing on the policies and procedures around federal equipment management. Specifically, the training should emphasize the importance of accuracy in the disposal request forms, including federal funding. The training should also focus on the importance of timely updates to the equipment inventory listing to ensure the listing is complete and accurate. Management’s Views and Corrective Action Plan Management’s Views and Corrective Action Plan are included at the end of this report after the summary schedule of prior audit findings and status.
Equipment Management Grantor: Various Cluster: Research & Development Award Names: Various Award Numbers: Various Assistance Listing Number: Various Award Year: Various Criteria 2 CFR 200.313 (d)(1-2) indicates that a physical inventory of federal equipment must be taken and the results reconciled with property records at least once every two years. Additionally, accurate property records must be maintained which include various identifying information, such as the location, use and condition of the property and any ultimate disposition data, including the date of disposal and sale of the property. Condition In testing the Company’s conformity with the compliance requirements for equipment management, we selected 25 pieces of equipment from the detailed listings provided to physically inspect. Additionally, in order to test the completeness of the detailed listings, we selected 25 pieces of equipment from the “floor” and traced these to the detailed listings provided. Through our testing, we noted the following: • Two pieces of equipment out of the 25 selections made from the detailed listings for physical inspection were incorrectly included in the listings. o One asset was moved to another institution with the associated principal investigator. The asset was not included in the list of equipment approved for the transfer with the departure of the principal investigator. The department continued to certify the asset was in service after the transfer of the asset. The acquisition price of the asset was $6,023.36. o The second asset was acquired in 2008 and sold in 2023, at the direction of the principal investigator, with the proceeds of the sale allocated to a non-federal internal research fund. The department continued to certify the asset was in service after the disposal of the asset. Cause For the first asset that was improperly included in the detailed listing, two pieces of the same equipment were purchased together, and one of the two pieces of equipment was retained, which caused the department to inadvertently certify that both assets were still in service. Further, the asset was not included on the list of equipment approved for transfer with the principal investigator’s departure from the Company. For the second asset, the principal investigator in charge of the equipment is in the process of leaving the Company, and the department is moving or disposing of his equipment. The equipment management team was waiting until the Investigator’s space was completely cleared before updating the inventory listings. Effect The process around the transfer and/or disposal of equipment when there is a transfer of an award, or a transfer of the principal investigator is not properly reflected in the Company’s inventory records. Questioned Costs There are no questioned costs. Under the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6306, NIH permits institutions to obtain title to equipment for support of basic or applied scientific research without further obligation to the Federal government. NIH has the right to require transfer of title to equipment with an acquisition cost of $5,000 or more to the Federal government within 120 of the completion of the award. The associated award ended prior to FY24, so the title transfer period has expired. Therefore, the equipment disposal did not result in questioned costs. Recommendation We recommend that the Company provide additional training to the principal investigators and other grant personnel focusing on the policies and procedures around federal equipment management. Specifically, the training should emphasize the importance of accuracy in the disposal request forms, including federal funding. The training should also focus on the importance of timely updates to the equipment inventory listing to ensure the listing is complete and accurate. Management’s Views and Corrective Action Plan Management’s Views and Corrective Action Plan are included at the end of this report after the summary schedule of prior audit findings and status.
Finding 2024-011 – Equipment Management (Significant Deficiency and Noncompliance) Information on the Federal Program: U.S. Department of Education, Higher Education- Institutional Aid, Assistance Listing No. 84.031 Criteria: 2 CFR Section 200.313(d)(2) establishes the requirement that a physical inventory of property must be taken and the results reconciled with the property records at least every 2 years. Condition: Documentation of a physical inventory performed college-wide was not available. Cause: The College did not perform a physical inventory of assets purchased with federal funds in the last 2 years. Effect: The College did not have appropriate documentation that a physical inventory was performed. Questioned Costs: None Recommendation: We recommend the College strengthen its policies and procedures over equipment management to ensure a physical inventory is performed every 2 years, at a minimum. Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
2024-004 Internal Controls over Compliance and Compliance with Equipment and Real Property Management (Significant Deficiency) Information on the Federal Program: U.S. Department of Agriculture Assistance Listing Number: 10.606 Assistance Listing Name: Food for Progress Grant Award Number: Direct Award Number Award Period FCC-521-2016/012-00 September 29, 2016 through September 30, 2025 Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to 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. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework”, issued by the COSO. Also, a physical inventory of property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: During our testing of the equipment and real property management compliance requirements, we noted that there is no formally documented physical count of property acquired using federal funds in 2024 specific to Haiti. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: CRS country office personnel did not adhere to CRS’s documented policies and procedures for ensuring proper compliance with monitoring of property acquired using federal funds. Effect: Failure to conduct physical inventory of property could lead to misappropriation of assets and noncompliance with Federal regulations resulting in return of Federal awards received. Repeat Finding: No. Recommendation: We recommend that management implement policies, procedures and controls that will ensure the physical counts of property are conducted, that evidence of a count is formally documented and an authorized individual formally approves the result of the count, and the related reconciliation of property records, in order to adhere to Federal regulations related to equipment management and its related maintenance. Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance processes surrounding property reconciliation.
Finding 2024-013 – Equipment Management (Noncompliance) Identification of the Federal Program: All programs Criteria: 2 CFR 200.313 requires a physical inventory of property must be taken and the results reconciled with the property records at least once every two years. Condition/Cause/Effect: The City has not performed a physical inventory since September 2022. Questioned Costs: None reported. Recommendation: We recommend the City should strengthen policies and procedures to ensure a physical inventory of all city-wide departments is performed every two years. Views of Responsible Officials: The City agrees with the finding. See Management’s View and Corrective Action Plan included at the end of the report.