2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education Workforce for 2 C.F.R. §200.313(d)(1), which requires that 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. 2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education Workforce for 2 C.F.R. §200.313(d)(2), which states, 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. Due to a failure of internal controls and lack of review of District policy, the District did not maintain property records for assets acquired under the Education Stabilization Fund – Elementary and Secondary Education that identify all of the property record elements noted per 2 C.F.R. § 200.313(d)(1). Additionally, there was no indication that a physical inventory of the property acquired under the Education Stabilization Fund – Elementary and Secondary Education had been performed within the preceding two years. Failure to maintain property records and perform physical inspections over equipment and real property acquired with federal funds may result in asset misappropriation and a loss of future federal funding. To ensure proper oversight and accountability for equipment and real property, the District should review its policy and verify that property records are maintained in accordance with 2 C.F.R. §200.313(d). Additionally, physical inventories shoul e reconciled with the property records at least once every two years.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 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). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, 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 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). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
Finding Number: 2024-002 Assistance Listing Number and Title: AL # 84.425 Education Stabilization Fund Federal Award Identification Number / Year: 2024 Federal Agency: US Department of Education Compliance Requirement: Equipment and Real Property Management Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. The School District purchased HVAC equipment in the amount of $1,032,599 using COVID 19: Elementary and Secondary School Emergency Relief Funds in FY 22; however, they failed to add these assets to their capital asset listing due to a failure in adequately designed controls and still have not updated this in the capital asset records as of June 30, 2024. The also have not performed an inventory count in the past 2 years. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The Treasurer and Superintendent should monitor transactions and ensure that all capital additions are properly documented in the capital asset records.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d)(1) which provides that property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Additionally, 2 CFR § 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Due to inadequate controls, the District failed to appropriately track a bus purchased in part with Special Education Cluster grants monies in September 2019. The bus is included on the District's capital asset listing; however, it is listed as being purchased from a fund other than the Special Education Cluster grant funds. Additionally, the District did not maintain support for the cost allocation information as required by the Ohio Department of Education and Workforce (DEW). Therefore, the District does not have support for the proportionate share of the cost covered by the grant as required upon disposition of the bus. The District also did not maintain documentation of the required physical inventory. The failure to properly record assets can lead to difficulties maintaining accountability for the related assets. The District should implement controls to ensure compliance with all DEW and Uniform Guidance requirements when purchasing equipment with Federal award funds.
2024-004 — Equipment and Real Property Management – Significant Deficiency in Internal Control Over Compliance and Noncompliance Federal program information: Funding agencies: U.S. Department of Education Titles: Higher Education Institutional Aid ALN Number: 84.031 Award years: Various Criteria: 2 CFR 200.313(c) through (e), requires that equipment be used in federal programs for which it was acquired for, when appropriate, other federal programs. Equipment records shall be maintained including required elements, a physical inventory of equipment be taken at least once every 2 years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained. Condition: The College has not completed a physical inventory within the previous two fiscal years as required. In addition, the records were not detailed enough that program management is able to adequately and efficiently identify and locate any and all items. Questioned Costs: None Cause: The College is not enforcing their procedures to verify that the capital assets inventory has been taken annually and reconciled to the general ledger. Effect: Without a physical inventory, there is an increase in the probability that the capital asset listing will be incorrect, or assets listed may not exist. Auditor’s Recommendations: Enforce internal control procedures and complete an inventory of the school’s capital assets annually. Management’s Response: The College will take an inventory of its capital assets as required by policies.
2024-004 — Equipment and Real Property Management – Significant Deficiency in Internal Control Over Compliance and Noncompliance Federal program information: Funding agencies: U.S. Department of Education Titles: Higher Education Institutional Aid ALN Number: 84.031 Award years: Various Criteria: 2 CFR 200.313(c) through (e), requires that equipment be used in federal programs for which it was acquired for, when appropriate, other federal programs. Equipment records shall be maintained including required elements, a physical inventory of equipment be taken at least once every 2 years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained. Condition: The College has not completed a physical inventory within the previous two fiscal years as required. In addition, the records were not detailed enough that program management is able to adequately and efficiently identify and locate any and all items. Questioned Costs: None Cause: The College is not enforcing their procedures to verify that the capital assets inventory has been taken annually and reconciled to the general ledger. Effect: Without a physical inventory, there is an increase in the probability that the capital asset listing will be incorrect, or assets listed may not exist. Auditor’s Recommendations: Enforce internal control procedures and complete an inventory of the school’s capital assets annually. Management’s Response: The College will take an inventory of its capital assets as required by policies.
FINDING REFERENCE NUMBER 2024-006 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 H027A230003 – 23A (07/01/2023 – 09/30/2024); H027A230003 – 24A (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A230002 (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 MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS 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, 2024. 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 $844,273.56, classified as programs and licenses, should not be capitalized as equipment because they have a useful life of less than one year. From the samples selected for the different programs, we were able to identify that the property records are not being updated in a reasonable timeframe, since for a total of twenty-six (26) items evaluated, the person assigned as the equipment custodian in the records is not the current custodian of the equipment. 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. There is an item describing a three-person sectional sofa, when we viewed the article, they showed us a five-burner stove with the sofa's property number. 2. One (1) item could not be 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. One (1) item could not be observed. 2. One (1) item, an air-conditioning, purchased in February 2024, at the time of our test in September 2025, is still uninstalled, as the area lacks the necessary connection. 3. Two (2) items, an institutional frying pan and a stainless-steel worktable, purchased in October 2023 and February 2024 respectively, at the time of our test in September 2025, remain in the equipment warehouse at Las Piedras without being installed and used. 4. One (1) item, a hydroponic nursery, purchased in November 2023, at the time of our test in September 2025, was not in used and looks as if not fully installed and deteriorated. 5. One (1) item, an Apple Computer, purchased in December 2023 to a private school, at the time of our test in September 2025 was observed at the OFA equipment warehouse because the private school closed operations, the equipment records were not updated to reflect these changes. QUESTIONED COSTS None. PERSPECTIVE INFORMATION Each school principal conducted an equipment count, but it was not reviewed, and not all schools did so. No inventory taken was provided, the last inventory was made in 2019, and the latter revealed deficiencies. The identified deficiencies constitute a systemic problem. Items purchased during fiscal year under audit were not installed, located, and no proper tracking of transfer of equipment is maintained in the PRDE. STATEMENT OF CAUSE Due to various natural events that have occurred and the COVID-19 pandemic, the PRDE has not been able to work with the inventory and update it. In addition, the Property Department does not have procedures in place in order to identify incomplete records, unidentified dispositions, equipment not installed or not in use. 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 2023-006). 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. VIEWS OF RESPONSIBLE OFFICIALS Management agrees with the finding and has initiated corrective actions to address each of the issues identified by the auditors. The Department of Education of Puerto Rico (PRDE) recognizes the importance of maintaining an accurate and up-to-date property inventory in accordance with federal regulations under 2 CFR §200.313(d), and is implementing measures to strengthen controls, ensure proper tagging, and monitor the location, use, and condition of all federally funded equipment. The Property Office has initiated a complete physical inventory to reconcile the existing property records with actual assets. All equipment custodians will be required to verify and certify their assigned inventory to ensure records are accurate and reflect current locations and responsible personnel. For deficiencies identified for the IDEA Cluster: Condition 1: For the item describing a three-person sectional sofa, which upon inspection corresponded to a five-burner stove, the Property Office corrected the equipment tag to ensure identification of both items. The correction was made directly on the physical assets to properly reflected the correct property numbers and descriptions. Condition 2: The item identified as not observed corresponds to software licenses that were distributed to teachers for instructional use. The Property Office maintains a detailed record identifying the licenses purchased, the specific equipment on which each license was installed, and the corresponding custodian. For deficiencies identified for the Education Stabilization Fund Programs: Condition 1: For the items that could not be observed during the auditors’ site visits, the Property Office will perform a follow-up investigation with the corresponding school to locate the equipment. Condition 2: The school where the air-conditioning unit is located has experienced electrical voltage issues, which have delayed its installation to prevent potential damage to the equipment. The situation is being addressed in coordination with the school’s maintenance team to correct the electrical problem. Once resolved, the PRDE will proceed with the installation. In parallel, the property office will consult with the corresponding federal program to evaluate the possibility of relocating the unit to another school where the equipment is needed and can be safely installed and used. Condition 3: This type of equipment is kept in the warehouse until a specific need is identified in a school facility. Once a school requests or is identified as requiring the equipment, the Property Office initiates the corresponding transfer, and the movement is duly documented and updated in the property management system.. this process ensures that equipment is allocated efficiently based on program needs and that all transfers are properly supported with documentation. Condition 4: The hydroponic nursery will be relocated to a school where it can be properly utilized for educational purposes. The Property Office, in coordination with the corresponding program, will verify the current condition of the equipment and perform the necessary repairs or adjustments to ensure it is fully functional and in use as intended. Condition 5: The Property Office has already identified a new school to which the Apple computer will be transferred to ensure it is properly utilized for educational purposes. The transfer will be completed om coordination with the corresponding program, and the property records will be updated accordingly to reflect the new location and custodian of the equipment. The PRDE is committed to correcting all deficiencies noted in the finding. All actions described above will be documented and reported as part of the corrective action plan, with an expected completion timeline within fiscal year 2025. These measures will ensure compliance with the Uniform Guidance and strengthen the overall management and safeguarding of federally funded property and equipment. IMPLEMENTATION DATE In process. RESPONSIBLE PERSON Nilda Z. Morales Vazquez Property Office Director
CRITERIA/SPECIFIC REQUIREMENT: The Regional Office of Education No. 39 did not have adequate record keeping over its equipment acquired from federal funds. The Code of Federal Regulations (2 CFR §200.313(d)(1)) requires that procedures for managing equipment acquired with federal funds must maintain property records that include the following information: (i) a description of the property, (ii) manufacturer’s serial number or other identification number, (iii) source of the funding for the property (including the Federal Award Identification Number (FAIN)), (iv) who holds title, (v) acquisition date (vi) cost of the property, (vii) percentage of federal contribution in the project cost for the Federal award under which the property was acquired, (viii) location (ix) use and condition of the property, and (x) and any ultimate disposition data, including date of disposal and sale price of the property. Moreover, the Code (2 CFR §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include record keeping and monitoring of equipment acquired from federal funds. CONDITION: The Regional Office of Education No. 39 manually maintains and stores its inventory of property and equipment. Asset details in the property records include only the description of the property, manufacturer’s serial number or other identification number, source of funds, who holds title, acquisition date, and cost of the property. The other minimum requirements specified by the Code including FAIN, location, use and condition of the property are not included in the property records. EFFECT: Inadequate record keeping over equipment acquired from federal funds may result in noncompliance with the Code. CAUSE: Management indicated that the issue was due to oversight and lack of training on requirements. RECOMMENDATION: The Regional Office of Education No. 39 should maintain detailed property records as required by federal regulations to ensure full compliance. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and is implementing documents and procedures to meet requirements in the future
2024-004 – Significant Deficiency and Nonmaterial Noncompliance – Equipment and Real Property Management Program: Education Stabilization Fund (ALN 84.425) – United States Department of Education – Virginia Department of Education; Federal Award Year: 2024. Prior Year Audit Finding Number: N/A Criteria: 2 CFR section 200.313(d)(2) states: A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: The School Board began purchasing equipment under this program in 2022. A physical inventory was not performed during 2024. Cause: Procedures over equipment and property management not properly designed and implemented. Effect: Equipment and property not examined for any potential loss, damage, theft, or disposal. Questioned Costs: None Recommendation: Grant administrator should perform a physical inventory of property at least every two years Views of Responsible Officials and Planned Corrective Action: The Designees of the Grants Monitoring and Compliance team will oversee the completion of a physical inventory of all equipment that exceed $5,000 by October 31, 2026. The Grants team will also house documentation.
Equipment and Real Property Management – Significant Deficiency in Internal Controls over Compliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031C210038 Award Year: 2023-24, 2022-23 Criteria – Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) for real property and equipment management. 2 CFR 200.313(d)(1) requires that property records must be maintained that include, among other things, description of the property, source of funding for the property and percentage of Federal participation in the project costs for the Federal award under which the property was acquired. 2 CFR 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition/context – We selected a sample of 3 equipment purchases out of a population of 6 equipment purchases made during the year. The University did not maintain the required property records for any of the purchases. In addition, the University did not perform a physical inventory for those purchases in the last two years. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None. Cause/effect – This occurred because of lack of controls and an antiquated equipment tracking system. The University is unable to satisfy the requirement that they maintain proper records for equipment and adequately safeguards and maintains equipment. Repeat finding – Yes, 2023-008 Recommendation – We recommend the University update their equipment tracking system to allow the University to identify assets purchased with federal money. In addition, we recommend the University perform a physical inventory of its fixed asset at least once every two years. Views of responsible officials and planned corrective actions – Currently an informal yearly review of fixed assets between the operations and business offices is being done. Heritage has an asset inventory that is manually maintained, which indicates the items that are purchased with federal funds. Heritage’s operations department is taking ownership of documenting university fixed assets and deploying an asset management software. This will be helpful in conducting physical inventories in the future.
2024 – 010 – Capital Asset Inventory Documentation Federal Agency: US Department of Agriculture Federal Program Name: Extension Services at 1890 Colleges Assistance Listing Number: 10.512 Federal Award Identification Number and Year: NI201444XXXXG008-0005 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Regardless of whether equipment is acquired in part or its entirety under the federal award, the recipient or subrecipient must manage equipment. 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 and a control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. Additionally, reconciliation to property records and safeguarding of equipment are requirements under (2 CFR 200.313 (d)(2) and (3)). Condition: The University did not have documentation of inventory of federal funding being completed every two years as well as documentation supporting the safeguard of assets, nor was the auditor able to reconcile to property records or physically inspect the equipment. Questioned costs: None Context: During testing of property and equipment it was noted that none of the eight sample selections tested had been inventoried and no physical documentation supporting the property is appropriately safeguarded and maintained. Cause: The University did not have controls in place that comply with the federal regulations around inventory taking and safeguard keeping. Effect: The University is not in compliance with federal regulations around inventory taking and safeguard keeping. Failure to perform these procedures increases the risk of inaccurate property records, misstatement of federal award expenditures, and potential loss or misuse of federally funded equipment. Repeat Finding: No Recommendation: We recommend management implement procedures for physical inventory to be taken within a two-year timeframe as well as maintain evidence of assets possession such as photos of the property and equipment. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement (including statutory, regulatory, or other citation) - F. Equipment & Real Property Management - 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." Condition - The District was unable to demonstrate that a physical inventory was performed over the past two years. Questioned Costs - N/A. Context - The District maintains that a physical inventory takes place annually, but was unable to produce documentation to support when the last inventory took place. 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. Cause - The inability to maintain documentation for the performance of physical inventories of equipment does not exhibit compliance with Federal regulations. Recommendation - The District should create procedures to document and maintain records related to physical inventories of equipment to exhibit compliance with Federal regulations. Management's Response - The District has a physical inventory scheduled for 2025. The purchase order has been generated.
The Estill County Fiscal Court Failed To Implement Adequate Internal Controls Over Federal Programs Federal Program: Assistance Listing # 97.040 Chemical Stockpile Emergency Preparedness Program Award Number and Year: Multiple Years- CSEPP Grants Name of Federal Agency: United States Department of Homeland Security Pass Through Agency: Kentucky Department of Military Affairs Compliance Requirements: Allowable Costs/Cost Principles and Equipment and Real Property Management Finding: Material Weakness, Noncompliance Amount of Questioned Costs: None COVID Related: No The Estill County Fiscal Court did not establish and maintain effective internal controls over compliance with Chemical Stockpile Emergency Preparedness Program (CSEPP) requirements, resulting in the fiscal court being non-compliant with federal regulations. Additionally, during testing we noted one expenditure in the amount of $412,662 was not paid within 30 working days and there were 23 instances where equipment or property purchased was not added to the master inventory list as required. The master inventory list has not been updated since September 2022. The fiscal court believed that it had appropriate procedures in place and did not realize that they were not sufficient. As a result, there is an increased risk that the Estill County Fiscal Court is in noncompliance with the requirements that have a direct and material effect on CSEPP. 2 CFR § 200.303, titled Internal Controls, states 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 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). Additionally, 2 CFR § 200.313(d)(2), states, “A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.” We recommend the fiscal court design and implement internal controls that ensure material compliance with applicable requirements for all federal awards.
Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2022-001, FA 2023-002 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,167,690.48 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “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.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the ESSER program equipment listing and physically locating equipment items: • Property records maintained by the School District did not include the FAIN (Federal Award Identification Number) for one asset. • One piece of equipment could not be physically located based on information included in the property records. • There was no evidence that a physical inventory had been performed in either the current fiscal year or the previous three fiscal years. Cause: ESSER program personnel did not perform a separate physical inventory, as they mistakenly believed that all equipment items, including those purchased with ESSER funds and listed on the overall capital asset listing, had already been inventoried. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.
2024-004 U.S. Department of Education, Assistance Listing #84.425D, #84.425U, and #84.425W, Elementary and Secondary School Emergency Relief Funds for the year July 1, 2023, through June 30, 2024 Criteria: In accordance with 2 CFR 200.313, property records for equipment and real property purchased with Federal funds must be maintained that include a description of the property, a serial number or other identification number, the source funding for the property, who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the Federal award, the location, use, and condition of the property. Condition: The Facilities Department maintains a spreadsheet of capital assets purchased with Elementary and Secondary School Emergency Relief Funds (ESSER) for assets procured through the Facilities Department. The City Finance Department also maintains a capital asset listing for financial reporting purposes, however, assets funded by grant proceeds are not separately identified in the listing. Cause: There are no formal procedures for tracking Federally funded assets. Effect: Federally funded assets are not identified and tracked. If the City were to sell a Federally funded asset, they may be required to remit some of the proceeds back to the grantor agency. Therefore, if the asset was not properly identified and tracked the City could inadvertently profit from the Federal funding. Recommendation: It is our recommendation that procedures be established for the tracking of federally funded assets. Questioned Costs: None
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.
Finding 2024-013: Material Weakness in Internal Control and Material Noncompliance – Equipment and Real Property Management Assistance Listing Program Title and Number: Airport Improvement Program , Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (20.106), CDBG Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Transportation, U.S. Department of Housing and Urban Development Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: The City must follow equipment and real property management standards as required by 2 CFR section 200.313(c) through (e) which states that a physical inventory of the property must be conducted and the results reconciled with the property records at least once every two years and that adequate maintenance procedures must be developed to keep the property in good condition. 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 section 200.313(d)(1)). Condition: The City was not able to provide supporting documentation that an inventory of federally acquired equipment had been completed at minimum once, in the prior two years, nor were they able to produce maintenance records for all inventory items that were selected for testing. Additionally, the assets are not tracked separately from other City assets with property records which note the serial number, date placed in service and specific location of the asset. Cause: The City did not have established policies and procedures in place to ensure an inventory of federally acquired property is completed at minimum once every two years, and that inventory records are sufficiently detailed, nor are there established policies and procedures in place for the upkeep and maintenance requirements of federally acquired equipment. Effect: The City may misplace or misappropriate an asset that was acquired using federal dollars, or an asset acquired using federal monies may fall into disrepair and not be fully utilized. Context: For CDBG, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled five assets valued at $476,392 out of a total of 28 assets purchased using grant funds since inception valued at approximately $2,300,000 at June 30, 2024. Of that sample there were two additions valued at $192,180 out of a total of three additions for the fiscal year ended June 30, 2024 valued at $210,930. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. For AIP, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled three assets valued at $287,340 out of a total of six assets purchased using grants funds since inception valued at approximately $393,000 at June 30, 2024. The sample included the only addition during the year ended June 30, 2024, valued at $7,166. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls over their federally funded equipment and real property to ensure they are compliant with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.
2 CFR § 3474.1 gives regulatory effect to the Office of Budget and Management Guidance in 2 CFR § 200.313(d) for the Department of Education, which states, in part, that a control system must be in place to ensure safeguards to prevent loss, damage, or theft of the equipment. It also requires that the recipient or subrecipient maintain property records that include a description of the asset, a serial number or other source of identification (including the FAIN), the source of funding for the property and other data to identify the equipment. Finally, it requires recipients or subrecipients to perform a physical inventory of property purchased with federal funds and reconcile the inventory results to the recipient or subrecipient’s property records at least once every two years. Due to insufficient knowledge of and controls implemented over the federal requirements related to equipment, the School could not provide evidence that a physical inventory over property purchased with Education Stabilization Funds had been taken and reconciled with property records in the required timeframe. In addition, records related to capital asset purchases with Education Stabilization Funds did not contain serial or identification numbers, source of funding, who holds title, percentage of federal participation in the project costs for the federal award under which the property was acquired, and use and condition of the property, in accordance with the above requirements. Lack of controls over equipment management and failure to complete the required inventory results in a qualified opinion on the School’s Major Federal Program and could lead to misappropriation of School assets and potential questioned costs and non-compliance with federal requirements. The School should establish control procedures over the management of equipment. Controls would include proper tagging and logging of assets and regularly scheduled inventory dates.
Criteria or specific requirement: In accordance with 2 CFR § 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 FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs, the location, use and condition of the property, and any ultimate disposition data. Additionally, 2 CFR § 200.313(d)(2) requires that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: The District’s current capital asset listing does not contain the required informational elements to meet federal compliance requirements. Specifically, the listing lacks the source of funding, the percentage of federal participation, and the Federal Award Identification Number (FAIN), and no other listing of assets acquired with federal funds is maintained with this required information. Furthermore, assets acquired with federal funds were not individually tagged or identified as federal property within the District's inventory system. Cause: The District has not historically utilized federal awards for significant equipment acquisitions. Consequently, existing internal control policies and financial reporting templates were not updated to incorporate the specific data retention requirements mandated by the Uniform Guidance, nor was an alternative equipment inventory maintained for those assets acquired with Federal funds. Effect of potential effect: The District is not in compliance with federal property management standards. Failure to maintain detailed records and physical tags increases the risk that federally funded assets could be improperly disposed of, lost, or diverted to non-federal use without the required notification to the pass-through entity or federal awarding agency. Questioned costs: Known questioned costs are $162,447, representing the value of equipment with deficient records. Likely questioned costs were estimated at $248,198, based on an extrapolated error rate of 11.25% applied to total program vendor disbursements. Repeat finding: No Recommendation: We recommend the following enhancements, improvements and controls: Policy Enhancement: Management should update the District’s formal capitalization and inventory policies to explicitly include the data elements required by 2 CFR § 200.313. Process Improvement: The Finance Department should maintain a dedicated sub-ledger for equipment acquired with federal funds that includes all required reporting elements. Physical Controls: All equipment purchased with federal funds should be physically tagged with a unique identifier that correlates to the inventory listing, clearly noting the federal origin of the asset. Reconciliation: Perform a one-time retroactive update to the current inventory for all active federally funded assets to ensure all required fields are populated. Views of responsible officials: NASD will add the required tracking elements to the Capital asset listing in order to meet the federal compliance requirements. NASD will specifically add the funding source, percentage of federal participation and the Federal Award Identification Number (FAIN). NASD will also properly tag and identify the physical assets.
Finding 2024-001 – Equipment and Real Property Federal Program: Coal Miners Respiratory Impairment Treatment Clinics and Services ALN: 93.965 Federal Agency: U.S. Department of Health and Human Services Federal Award Years: July 1, 2023 through June 30, 2024 Criteria: 2 CFR section 200.313(d)(2) requires a physical inventory of federal property to be taken and the results to be reconciled with the property records at least once every two years. Condition Found, Including Perspective: The System did not conduct a physical inventory of the property purchased with federal funds and reconcile the inventory with the property records in 2024 nor in 2023. Therefore, the System was not in compliance with the applicable federal requirements. Possible Cause and Effect: The System lacks a formalized process to verify the condition and existence of federally funded purchased equipment and the System lacks a formalized process to reconcile these amounts back to the property records. Questioned Costs: None. Statistical Validity: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year: This is not a repeat finding. Recommendation We recommend that management strengthen procedures around performing a physical inventory of the property and reconciling the results at least once every two years. Views of Responsible Officials: Owensboro Health, Inc. concurs with this finding and is working to put procedures in place to perform a formalized physical inventory and a reconciliation of the results on at least a biannual basis.
Finding 2024-001 – Equipment and Real Property Federal Program: Coal Miners Respiratory Impairment Treatment Clinics and Services ALN: 93.965 Federal Agency: U.S. Department of Health and Human Services Federal Award Years: July 1, 2023 through June 30, 2024 Criteria: 2 CFR section 200.313(d)(2) requires a physical inventory of federal property to be taken and the results to be reconciled with the property records at least once every two years. Condition Found, Including Perspective: The System did not conduct a physical inventory of the property purchased with federal funds and reconcile the inventory with the property records in 2024 nor in 2023. Therefore, the System was not in compliance with the applicable federal requirements. Possible Cause and Effect: The System lacks a formalized process to verify the condition and existence of federally funded purchased equipment and the System lacks a formalized process to reconcile these amounts back to the property records. Questioned Costs: None. Statistical Validity: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year: This is not a repeat finding. Recommendation We recommend that management strengthen procedures around performing a physical inventory of the property and reconciling the results at least once every two years. Views of Responsible Officials: Owensboro Health, Inc. concurs with this finding and is working to put procedures in place to perform a formalized physical inventory and a reconciliation of the results on at least a biannual basis.
#2024-001: Grant Program: 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: 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, 2024, the written policies were not in place. 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.
Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award number: 90CH01142504 90HE00049801C6 Criteria or Specific Requirement: Under 2 CFR 200 200.313(4)(2), a physical inventory of property must be taken at lease once every two years. The results should be reconciled with the general ledger. Condition: CAPSC has not performed a physical inventory in the last two years. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, CAPSC may be overstating or understating capital assets in its financial statements. Cause: CAPSC has experienced turnover and, as a result, did not perform the physical inventory. Repeat: No Auditor's Recommendation: CAPSC should maintain its documentation of an entity-wide 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. CAPSC should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: CAPSC agrees with the audit finding and has written a corrective action plan.
Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award number: 90CH01142504 90HE00049801C6 Criteria or Specific Requirement: Under 2 CFR 200 200.313(4)(2), a physical inventory of property must be taken at lease once every two years. The results should be reconciled with the general ledger. Condition: CAPSC has not performed a physical inventory in the last two years. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, CAPSC may be overstating or understating capital assets in its financial statements. Cause: CAPSC has experienced turnover and, as a result, did not perform the physical inventory. Repeat: No Auditor's Recommendation: CAPSC should maintain its documentation of an entity-wide 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. CAPSC should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: CAPSC agrees with the audit finding and has written a corrective action plan.
Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award number: 90CH01142504 90HE00049801C6 Criteria or Specific Requirement: Under 2 CFR 200 200.313(4)(2), a physical inventory of property must be taken at lease once every two years. The results should be reconciled with the general ledger. Condition: CAPSC has not performed a physical inventory in the last two years. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, CAPSC may be overstating or understating capital assets in its financial statements. Cause: CAPSC has experienced turnover and, as a result, did not perform the physical inventory. Repeat: No Auditor's Recommendation: CAPSC should maintain its documentation of an entity-wide 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. CAPSC should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: CAPSC agrees with the audit finding and has written a corrective action plan.
Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award number: 90CH01142504 90HE00049801C6 Criteria or Specific Requirement: Under 2 CFR 200 200.313(4)(2), a physical inventory of property must be taken at lease once every two years. The results should be reconciled with the general ledger. Condition: CAPSC has not performed a physical inventory in the last two years. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, CAPSC may be overstating or understating capital assets in its financial statements. Cause: CAPSC has experienced turnover and, as a result, did not perform the physical inventory. Repeat: No Auditor's Recommendation: CAPSC should maintain its documentation of an entity-wide 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. CAPSC should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: CAPSC agrees with the audit finding and has written a corrective action plan.
Finding 2023-001 Assistance Listing: 93.889 Regional Healthcare System Coordinate for Disaster Preparedness Condition: The Center did not perform a physical inventory of the equipment provided to any member hospitals within the past two years. Criteria: 2 CFR 200.313 addresses requirements and conditions regarding equipment acquired under a Federal award. 2 CFR 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Cause: Due to organizational turnover in fiscal year 2022 and again in fiscal year 2023, no physical inventory was completed during these years. Effect: The Center did not perform adequate procedures to ensure proper equipment management was taking place at member hospitals. Repeat finding: This is not a repeat finding. Questioned costs: None Recommendation: We recommend that The Center develop a policy and procedure to ensure that all member hospitals are visited at least once every two years for a physical equipment inspection. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.
Finding No. 2023-002: 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. Additionally, although there is a listing of property and equipment this is not regularly reviewed or maintained. 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: No 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.
Federal Agency - United States Department of Agriculture Federal Programs - Water and Waste Disposal Systems for Rural Communities - (10.760) Federal Award Years - 2019 State Agency - Not applicable Reference - 2023-002 Capital Asset Records - Material Weakness and Noncompliance Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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. 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. Condition - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party export. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Repeat Finding - This is a repeat finding of item 2022-002 as reported for the year ended December 31, 2022. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue. View’s of Responsible Officials and Planned Corrective Actions - Management will look at investing in a capital asset software and having a physical inventory performed.
FINDING 2023-001 Subject: CDBG - Entitlement Grants Cluster - Equipment and Real Property Management Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Year (or Other Identifying Numbers): B-18-MC-18-0001, B-19-MC-18-0001, B-20-MC-18-0001, B-21-MC-18-0001, B-22-MC-18-0001, B-23-MC-18-0001 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context Community Development Block Grants/Entitlement Grants (CDBG) may be used to acquire real and personal property, supplies, and equipment. Equipment purchased with CDBG 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 City maintained property records, adequate property records for assets purchased with CDBG award funds was not maintained. The one asset purchased with CDBG funds, totaling $222,333, was added to the property records, but did not include the source of funding for the property, who holds title, percentage of federal participation, and condition 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). . . ." 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 A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The City did not add an improvement as they were unaware that this should be added to the property records. In addition, the property records did not include all the necessary fields as the City did not know the additional information was needed. 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 required elements of the property record were documented for assets acquired with CDBG award funds nor were all assets added to the property records. 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 City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure property records are maintained for all assets purchased and that all required elements are included within the property records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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. 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. Condition - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party expert. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue.
FINDING 2023-004 Subject: Water and Waste Disposal Systems for Rural Communities - Equipment and Real Property Management Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. A property record or capital asset listing, which would include the information listed below, is to be maintained for assets purchased that exceed the Town's capitalization threshold. In addition, a physical inventory of all capital assets should be completed at least every two years. Capital Asset Listing Information 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. The Town purchased one asset, totaling $477,750, which exceeded the Town's capitalization threshold. The asset was determined not to have been recorded in property records, nor was the asset on the inventory listing. Additionally, the Town did not complete a capital asset inventory every two years as required. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF FRANKTON 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. . . ." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that an inventory of capital assets had been completed. Additionally, the provided capital asset listing did not include the asset in question. Lastly, the capital asset listing included items that were under the capital asset threshold in the Town's Capital Asset Policy. INDIANA STATE BOARD OF ACCOUNTS 23 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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. As such, a capital asset purchased with federal funds was not properly recorded in a capital asset ledger, and a physical inventory was not performed. 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 Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town 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 2023-001 Subject: Airport Improvement Program - 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 Number and Year (or Other Identifying Number): 3-18-0082-050 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 TERRE HAUTE REGIONAL AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Detailed capital asset records are to be maintained by the entity. The 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. The Authority provided a capital asset list that only included the asset description and value amount. The listing did not include all the requirements as stated above. 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 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. . . ." Cause The Authority was unaware that they needed to maintain detailed capital asset records with requirements as stated above. Effect Without the proper implementation of an effectively designed system of internal controls, the Authority cannot ensure that all capital assets are being included in the records of the Authority. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 14 TERRE HAUTE REGIONAL AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the Authority's management strengthen its system of internal controls to ensure that they maintain detailed capital asset records that include all the requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Reference Number: 2023-002 Federal Agency: U.S. Department of Homeland Security Federal Program: Rail and Transit Security Grant Program ALN Number: 97.075 Contract Number: FE2019-RA-00004; FE2020-RA-00005; FE2021-RA-00004; FE2022-RA-00006 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency-Non-Compliance (1) CRITERIA Equipment and Real Property Management - As stated in Uniform Grant Guidance - §200.313 Requirements for Equipment and Real Property Management: • 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 section 200.313(d)(1)). • 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 section 200.313(d)(2)). (2) CONDITION/PERSPECTIVE The MTA has Equipment and Real Property management procedures in place. MTA has corporate policies and procedures regarding Equipment and Real Property management. We tested the Rail and Transit Security Grant Program’s Equipment and Real Property management compliance. Based on our review of the Equipment and Real Property for this program, we noted that the physical inventory of the program property was not taken in the last two years, as required by 2 CFR section 200.313(d)(2). (3) CAUSE MTA did not ensure that the physical inventory of the program property was completed and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (4) EFFECT MTA may be considered non-compliant related to Equipment and Real Property management compliance as required by 2 CFR section 200.313(d)(2). (5) REPEAT FINDING No (6) RECOMMENDATION We recommend that MTA ensure that the physical inventory of the property must be taken and the results reconciled with the property records at least once every two years as required by 2 CFR section 200.313(d)(2). (7) QUESTIONED COST None. (8) VIEWS OF RESPONSIBLE OFFICIAL The MTA Office of Security is acknowledging the finding. The MTA Office of Security is implementing an update on our procedures for equipment inventory management. We will be working with the Office of Security’s Director of Quality Assurance along with MTAHQ Audit, to help us review all equipment inventory listings and physical inventory inspection of federally funded purchased equipment. We will be implementing an internal agreement between MTA Office of Security and the MTA Agency awarded federal funds under grant programs managed by HQ Office of Security. This agreement will include all terms and conditions applicable to the specific grant award. Also, see “Corrective Action Plan”.
Reference Number: 2023-004 Federal Agency: U.S. Department of Transportation Federal Program: Public Transportation Emergency Relief Program Cluster Program: Not Applicable ALN Number: 20.527 Contract Number: Various Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency-Non-Compliance (1) CRITERIA Equipment and Real Property Management - As stated in Uniform Grant Guidance - §200.313 Requirements for Equipment and Real Property Management: • 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 section 200.313(d)(1)). • 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 section 200.313(d)(2)). (2) CONDITION/PERSPECTIVE The MTA has Equipment and Real Property management procedures in place. MTA has corporate policies and procedures regarding Equipment and Real Property management. We tested the Public Transportation Emergency Relief Program’s Equipment and Real Property management compliance. Based on our review of the Equipment and Real Property for this program, we noted of sixty samples selected, eight (8) equipment samples related to New York City Transit Authority were transferred to the City of New York Police Department. The eight piece of equipment related to police radios and were included in MTA Biannual report as out-of service and fully depreciated. Therefore, we were not able to verify existence of these piece of equipment. (3) CAUSE MTA did not ensure that all out-of-service equipment was properly adjusted in the MTA Bi-Annual report and a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. (4) EFFECT MTA may be considered non-compliant related to Equipment and Real Property management compliance related to 2 CFR section 200.313(d)(2). (5) REPEAT FINDING No (6) RECOMMENDATION We recommend that the MTA ensure all equipment in service should be properly accounted and reported in MTA’s Bi-Annual report and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). (7) QUESTIONED COST None. (8) VIEWS OF RESPONSIBLE OFFICIAL MTA is acknowledging the finding. The assets are fully depreciated. We will remove the assets from the Biennial listing from PSR and write them off from the accounting system. Also, see “Corrective Action Plan”.
Finding 2023-002 – Equipment and real property management Program Name (ALN): Public Transportation Emergency Relief Program (ALN 20.527) Federal Agency: U.S. Department of Transportation Federal Grant Numbers and Years: NJ-44-X004 (April 1, 2014 – November 5, 2023) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Prior Year Finding: Not applicable Finding Type: Material weakness and material noncompliance 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 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 Section 200.313(d)(1)). A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years as required by 2 CFR Section 200.313(d)(2). In addition, under 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Port Authority of New York and New Jersey (the Port Authority) used the Public Transportation Emergency Relief Program to purchase equipment to perform maintenance and inspection of the track damaged by Superstorm Sandy, repair the damage, and allow the Port Authority to be more resilient in future events. We noted the Port Authority did not perform a physical inventory of the equipment within the required two-year period. Further, during our physical observation of fifteen pieces of equipment, we noted for four items, the serial numbers included on the equipment’s tag did not match the serial number included in the Port Authority’s property records. Cause: In discussing these conditions with the Port Authority’s management, they stated inadequate staffing resources due to staff turnover contributed to the finding. Effect: Failure to perform an inventory at least once every two years and maintaining accurate property records may prohibit the Port Authority from properly safeguarding and maintaining equipment in accordance with federal requirements. Questioned Costs: None. Recommendation: We recommend that the Port Authority strengthen its processes to ensure a physical inventory of equipment acquired with federal funds is performed at least once during each two-year period. Views of Responsible Officials: The Port Authority acknowledges an internal control deficiency in performing a physical equipment inventory of equipment as required under CFR 200 for the Public Transportation Emergency Relief Program 2013 49 U.S.C. 5324 (Grant award NJ-44-X004 PATH-H.) PATH successfully performed a physical inventory of equipment in 2018, the first year it was required. In 2020, the performance of a physical inventory coincided with the COVID-19 pandemic which facilitated the retirement of key personnel in PATH who were responsible for performing the physical inventory of the equipment that was federally funded. This staff transition led to a loss of PATH system expertise necessary to pick up the process previously developed, resulting in the inadvertent lapse in performing the physical inventory in 2020 and 2022. To mitigate this deficiency PATH has performed a physical inventory in 2024 and updated its procedures as they relate to performing the physical inventory of equipment and to have staffing redundancies in place to account for staff turnover. In addition, PATH updated its equipment inventory log to reflect the correct serial numbers on the four pieces of equipment that KPMG identified.
Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.313(d)(2) states that a physical inventory of property must be taken and the results reconciled with the property record at least once every two years. Condition: During testing, it was noted that a physical inventory and reconciliation with the property records had not been performed. Questioned costs: None. Context: A sample of 4 was made from a population of 4 pieces of equipment purchased with funds from the major program (entire population). Of the 4 sampled, all belonged to a population of assets that had not been part of a formal physical inventory and property reconciliation. Cause: The Organization does not currently have procedures in place to perform a formal inventory count and reconciliation with the property records at least once every two years. Effect: Without periodic equipment counts, the Organization is in noncompliance with federal regulations around Equipment and Real Property Management. In addition, there is an increased risk of errors and inaccuracies in the inventory records and an increased risk of fraud or theft going undetected. Repeat Finding: No. Recommendation: CLA recommends that the Organization adopt policies and procedures that include performing a formal inventory count and reconciliation back to the property records at least once every two years, in compliance with 2 CFR 200.313(d)(2). The inventory count should be documented and signed by the individual performing the count as a form of attestation to the amounts recorded. Views of responsible officials: There is no disagreement with the audit finding.
Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: Assistance Listing #: 15.022 U.S. Department of the Interior Tribal Self-Governance/Indian Reservation Roads Program Award Numbers: GT-OSGT107-10/A16AP00068 Award Periods: 1/1/2011 – 12/31/2023 Criteria: Internal control is a process, effected by an entity’s…[governing body], management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance: (Internal Control – Integrated Framework, Committee of Sponsoring Organizations of the Treadway Commission, © May 2013, p.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 sales price of the property (2 CFR section 200.313(d)(1)). 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 section 200.313(d)(2)). 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 section 200.313(d)(3)). Condition/Context: Management completed a physical inventory in 2022-2023, but was not able to provide support showing management review and approval. [ ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Turnover in key personnel, lack of internal controls, and the inability to provide supporting documentation. Effect: Without review and approval of the physical inventory listing, it is possible the reconciliation to property records may not occur. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that physical inventory is taken, that the results are reconciled with the property records at least once every 2 years, and that documentation of this process is stored for review at a later date. View of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the Written procedures for determining the allowability of costs in accordance with Subpart E (Cost Principles) of this part and the terms and conditions of the Federal award. 3. Conflict of Interest 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
Federal Agency - United States Department of Housing and Urban Development Federal Programs - Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii - (14.228) Federal Award Years - 2023 State Agency - Not applicable Reference - 2023-002 Capital Asset Records - Material Weakness and Noncompliance Criteria - Management is responsible for maintaining capital asset records that are accurate. Code of Federal Regulations (CFR) §200.313(d) Equipment states, at a minimum, the following must be met: 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. 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. Condition - The capital asset records are insufficient as they do not include the source of funding, acquisition date, or the cost of the property as well as certain other information required by Federal regulations. Additionally, no physical inventory has occurred nor is there a control system that has been implemented over these assets. Cause - The Town has not maintained capital asset records or engaged a third party expert. Effect of Condition - The Town is not in compliance with CFR §200.313(d). Additionally, capital assets have been excluded from these financial statements. Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample. Recommendation - We recommend the Town invest in capital asset software to maintain the capital assets and have a physical inventory performed. Questioned Costs - None. Perspective - No other material omissions were noted in the financial statements. This is an isolated issue.
FINDING 2023-003 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): CY 2023 Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that equipment purchased from the grant was included in the Town's capital asset listing. A physical inventory of equipment was not performed at least once within the last two years. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF LAFONTAINE 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. . . ." Cause The Town was not aware of the compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the required assets are included in the capital asset listing. Furthermore, 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. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF LAFONTAINE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties, to ensure capital assets purchased from the grant are included in the Town's 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 2023-003 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Federal Agency: U.S. Small Business Administration Federal Program: Congressional Grants, ALN No. 59.059, Award SBAHQ2210040, Award Period 9/1/2022 – 3/31/2023 Compliance Requirement: Equipment and Real Property Management Repeat Finding: No Condition: The Organization did not separately identify and track capital asset activity funded with federal grants. Questioned Costs: None Context: For the one sampled capital asset purchase, funded with this federal grant, no identifying or tracking method was used on the capital asset listing. Criteria: Per 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements (Uniform Guidance), Section 200.313 Equipment, "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 section 200.313(d)(1))." Cause: The grantor did not communicate this requirement in the grant award document. Effect: The identification of federally-funded capital assets allows for an organization to manage the asset throughout its useful life until disposition, when the federal grantor may be owed a portion of the proceeds of sale. Recommendation: We recommend a policy be developed that would include procedures for identifying and tracking capital assets funded with federal grants. This could include identification in a capital asset listing or using a tracking mechanism.
Finding 2023-001 Assistance Listing: 93.889 Regional Healthcare System Coordinate for Disaster Preparedness Condition: The Center did not perform a physical inventory of the equipment provided to any member hospitals within the past two years. Criteria: 2 CFR 200.313 addresses requirements and conditions regarding equipment acquired under a Federal award. 2 CFR 200.313(d)(2) states that a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Cause: Due to organizational turnover in fiscal year 2022 and again in fiscal year 2023, no physical inventory was completed during these years. Effect: The Center did not perform adequate procedures to ensure proper equipment management was taking place at member hospitals. Repeat finding: This is not a repeat finding. Questioned costs: None Recommendation: We recommend that The Center develop a policy and procedure to ensure that all member hospitals are visited at least once every two years for a physical equipment inspection. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.