Findings Citing § 200.313

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 10.205, 10.216, 12.630, 93.859 Federal Award Identification Number: NI211445XXXXG001, NI221445XXXXG019, 2020-38821-31093, 5P20GM103418-21, W911NF-22-1-0200, 5P20GM103447-23, P20CA233391, NNX15AP43A Award Period: 7/1/22-6/30/23 Type of Finding: Material Weakness in Internal Control over Compliance; Compliance, Material Noncompliance Condition: The University did not have documentation of physical inventory of the equipment purchased with Federal funds. Criteria or specific requirement: Uniform Grant Guidance, 2 CFR 200.313(d)(2), procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Context: During our testing of 30 equipment totaling $1,066,219, we observed 29 instances totaling $1,058,721 did not have documentation of a physical inventory completed. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure physical inventory over equipment was completed every two years. Effect: Failure to maintain accurate inventory records inhibits the University from properly safeguarding and maintaining equipment. Repeat finding: No Recommendation: We recommend the University ensure that a physical inventory over equipment is completed at least every two years. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.

Finding - District property records did not demonstrate compliance with Federal regulations by identifying the location of certain equipment funded by the ES Fund, resulting in questioned costs totaling $213,936. Criteria - Title 2, Section 200.313(d)(1), Code of Federal Regulations, requires that property records for equipment be maintained that include various details, such as 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), the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Title 2, Section 200.313(a), CFR, defines equipment as tangible property, including information technology systems, having a useful life of one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization threshold established by District. According to Board Policy 7.77 – Inventories and Property Records, the Superintendent or designee must maintain an adequate and accurate record of all tangible personal property of the District. All equipment must be listed that has a value or cost of $1,000 or more. Condition - During the 2022-23 fiscal year, District ES Fund expenditures totaled $9,501,131, including $213,936 expended for capitalized equipment with a value or cost of $1,000 or more. As part of our audit, we requested for examination District records supporting 14 selected items with costs exceeding the District $1,000 capitalization threshold and totaling $213,936. However, no records were provided to identify the equipment serial number, source of funding, condition, location, or otherwise properly account for the 14 items. Cause - District personnel indicated that the missing property information was an oversight as the employee responsible for recording property items was not timely provided with the appropriate acquisition information. Effect - Without effective accountability over Federal equipment, including the maintenance of appropriate property records, there is an increased risk that the equipment may be used for unauthorized purposes or not be readily located or identified as missing. Absent the required detailed property records, the ES Fund equipment acquisitions totaling $213,936 represent questioned costs. Recommendation - The District should conduct a thorough investigation of the ESSER Fund capital outlay expenditures to identify equipment acquisitions with costs exceeding the District $1,000 capitalization threshold, locate the applicable items, and prepare and maintain appropriate property records for those items. In addition, the District should restore to the FDOE the questioned costs related to any unlocated items and contact applicable law enforcement agencies regarding other necessary actions to help recover unlocated equipment. District Response - The District confirms the audit finding and will implement policies and procedures, as well as staff training, to ensure compliance with the ES Fund.

2023‐006 – Equipment and Real Property Management (Material Weakness over Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Airport Improvement Program, 20.106 Federal Awarding Agency: Department of Transportation, Federal Aviation Administration Federal Award ID Number: SAF‐SWG‐3‐35‐0037‐051‐2020 Federal Award Year: 2023 Condition: The City’s approved annual inventory was not complete and accurate. Certain assets listed as disposed were still in use for Airport operations, other assets that were disposed were included as active assets. Criteria: Per 2 CFR 200.303(a), the 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. 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)(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 City’s approved annual inventory contained errors in information and assets disposed of still listed. Questioned Cost: None. Effect: The City could dispose of or lose federally funded equipment without following federal guidelines.

2023‐006 – Equipment and Real Property Management (Material Weakness over Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Airport Improvement Program, 20.106 Federal Awarding Agency: Department of Transportation, Federal Aviation Administration Federal Award ID Number: SAF‐SWG‐3‐35‐0037‐051‐2020 Federal Award Year: 2023 Condition: The City’s approved annual inventory was not complete and accurate. Certain assets listed as disposed were still in use for Airport operations, other assets that were disposed were included as active assets. Criteria: Per 2 CFR 200.303(a), the 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. 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)(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 City’s approved annual inventory contained errors in information and assets disposed of still listed. Questioned Cost: None. Effect: The City could dispose of or lose federally funded equipment without following federal guidelines.

2023‐006 – Equipment and Real Property Management (Material Weakness over Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Airport Improvement Program, 20.106 Federal Awarding Agency: Department of Transportation, Federal Aviation Administration Federal Award ID Number: SAF‐SWG‐3‐35‐0037‐051‐2020 Federal Award Year: 2023 Condition: The City’s approved annual inventory was not complete and accurate. Certain assets listed as disposed were still in use for Airport operations, other assets that were disposed were included as active assets. Criteria: Per 2 CFR 200.303(a), the 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. 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)(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 City’s approved annual inventory contained errors in information and assets disposed of still listed. Questioned Cost: None. Effect: The City could dispose of or lose federally funded equipment without following federal guidelines.

2023‐006 – Equipment and Real Property Management (Material Weakness over Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Airport Improvement Program, 20.106 Federal Awarding Agency: Department of Transportation, Federal Aviation Administration Federal Award ID Number: SAF‐SWG‐3‐35‐0037‐051‐2020 Federal Award Year: 2023 Condition: The City’s approved annual inventory was not complete and accurate. Certain assets listed as disposed were still in use for Airport operations, other assets that were disposed were included as active assets. Criteria: Per 2 CFR 200.303(a), the 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. 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)(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 City’s approved annual inventory contained errors in information and assets disposed of still listed. Questioned Cost: None. Effect: The City could dispose of or lose federally funded equipment without following federal guidelines.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION – COVID-19 – EDUCATION STABILIZATION FUND (FEDERAL ALN 84.425) 2023-003 Internal Control Over Compliance With Equipment and Real Property Management Requirements Criteria – 2 CFR § 200.313(d)(1) requires Universal Academy (the Academy) to designate fixed assets purchased under federal programs and to maintain related property records, including a description of the property, a serial number or other unique identification number, the source of funding for the property (including the federal Assistance Listing Number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use, and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. Condition – During our audit, we noted that the Academy did not have sufficient controls in place within the COVID-19 – Education Stabilization Fund federal program to specifically identify federally-funded fixed assets and maintain the required records, as noted above, to assure compliance with federal equipment and real property management requirements. Questioned Costs – None. Our testing did not indicate any instances of noncompliance. Context – A population of one applicable fixed asset purchased with federal awards was noted during the course of our audit. This was not a statistically valid sample. Repeat Finding – This is a current year and prior year finding. Cause – The Academy did not did not have a system in place for specifically identifying federally-funded fixed assets and maintaining the required records as noted above. Effect – This could be viewed as a violation of the award agreement. Recommendation – We recommend that the Academy review its internal control procedures to ensure future compliance with the federal compliance requirements specific to equipment and real property management for the COVID-19 – Education Stabilization Fund federal program. View of Responsible Official and Planned Corrective Actions – The Academy agrees with the finding. The Academy intends to review its control procedures relating to equipment and real property management requirements to ensure compliance for future federal awards expenditures. The Academy has separately issued a Corrective Action Plan related to this finding.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION – COVID-19 – EDUCATION STABILIZATION FUND (FEDERAL ALN 84.425) 2023-003 Internal Control Over Compliance With Equipment and Real Property Management Requirements Criteria – 2 CFR § 200.313(d)(1) requires Universal Academy (the Academy) to designate fixed assets purchased under federal programs and to maintain related property records, including a description of the property, a serial number or other unique identification number, the source of funding for the property (including the federal Assistance Listing Number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use, and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. Condition – During our audit, we noted that the Academy did not have sufficient controls in place within the COVID-19 – Education Stabilization Fund federal program to specifically identify federally-funded fixed assets and maintain the required records, as noted above, to assure compliance with federal equipment and real property management requirements. Questioned Costs – None. Our testing did not indicate any instances of noncompliance. Context – A population of one applicable fixed asset purchased with federal awards was noted during the course of our audit. This was not a statistically valid sample. Repeat Finding – This is a current year and prior year finding. Cause – The Academy did not did not have a system in place for specifically identifying federally-funded fixed assets and maintaining the required records as noted above. Effect – This could be viewed as a violation of the award agreement. Recommendation – We recommend that the Academy review its internal control procedures to ensure future compliance with the federal compliance requirements specific to equipment and real property management for the COVID-19 – Education Stabilization Fund federal program. View of Responsible Official and Planned Corrective Actions – The Academy agrees with the finding. The Academy intends to review its control procedures relating to equipment and real property management requirements to ensure compliance for future federal awards expenditures. The Academy has separately issued a Corrective Action Plan related to this finding.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

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

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.

Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.