Finding 2022-001: Equipment and Real Property Management (Repeat Finding 2021-001) Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0025-22 FR-AMT-0026-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations ? 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations ? 2 CFR 200.303 ? Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For one of the equipment samples reviewed, it was observed that the asset did not have a unique asset identifier in the originally provided equipment population. 2. For seventeen of the equipment samples reviewed, it was observed that for six of them, the Condition data or Location field in the asset records was blank and, for twelve equipment samples, the Location field and/or Condition data per the asset records did not match the actual physical location and/or condition of the asset. We understand that was due to the assets records not being updated in a timely manner with the actual status of the equipment in the field. 3. During our procedures performed for seven assets, we identified that no inventory had occurred for the asset, even though it had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs None. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. Exceptions as described in the Condition section above were noted for matters 2, 3 and 6 in the Criteria section above, indicating that internal controls were not functioning as designed. No exceptions were noted for matters 1, 4, or 5 in the Criteria section above. Amtrak has had the same repeat finding for the last several audit periods. As exceptions were noted related to matter 6 in the Criteria section above, Amtrak has not taken sufficient actions to address audit findings related to their equipment internal controls. Effect Amtrak is in non-compliance with the related grant agreement. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. Cause The nature of much of Amtrak?s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak?s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. In reviewing management?s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates ?Capital Accounting staff contact personnel in each department to obtain updated information pertaining to the observation of every two-year inventory process.? This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding was identified as a repeat finding in the immediate prior year as Finding 2021-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak?s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Amtrak recognizes that remediation of this finding will require an investment in the organization structure and the technology solutions available to the company. Since being created in early 2022 the Asset Management team has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. To mitigate this finding, resources and investments are needed to address policy and governance around single auditable assets, the people and processes needed for a cradle-to-grave oversight of equipment management, and the technology needed to assist with creating and maintaining more robust internal controls, compliance, and timely audits. Efforts are underway that involve creating preventative internal controls, training of key personnel to help ensure that there is an end-to-end equipment lifecycle approach and accountability throughout an asset?s lifecycle, and the technology needed to support better location tracking of assets, the completion of audits, and recordkeeping. Finally, it is important to note that there has been a 31% year-over-year reduction in the total number of exceptions from thirty-six to twenty-five.
Finding 2022-001: Equipment and Real Property Management (Repeat Finding 2021-001) Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0025-22 FR-AMT-0026-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations ? 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations ? 2 CFR 200.303 ? Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For one of the equipment samples reviewed, it was observed that the asset did not have a unique asset identifier in the originally provided equipment population. 2. For seventeen of the equipment samples reviewed, it was observed that for six of them, the Condition data or Location field in the asset records was blank and, for twelve equipment samples, the Location field and/or Condition data per the asset records did not match the actual physical location and/or condition of the asset. We understand that was due to the assets records not being updated in a timely manner with the actual status of the equipment in the field. 3. During our procedures performed for seven assets, we identified that no inventory had occurred for the asset, even though it had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs None. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. Exceptions as described in the Condition section above were noted for matters 2, 3 and 6 in the Criteria section above, indicating that internal controls were not functioning as designed. No exceptions were noted for matters 1, 4, or 5 in the Criteria section above. Amtrak has had the same repeat finding for the last several audit periods. As exceptions were noted related to matter 6 in the Criteria section above, Amtrak has not taken sufficient actions to address audit findings related to their equipment internal controls. Effect Amtrak is in non-compliance with the related grant agreement. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. Cause The nature of much of Amtrak?s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak?s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. In reviewing management?s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates ?Capital Accounting staff contact personnel in each department to obtain updated information pertaining to the observation of every two-year inventory process.? This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding was identified as a repeat finding in the immediate prior year as Finding 2021-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak?s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Amtrak recognizes that remediation of this finding will require an investment in the organization structure and the technology solutions available to the company. Since being created in early 2022 the Asset Management team has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. To mitigate this finding, resources and investments are needed to address policy and governance around single auditable assets, the people and processes needed for a cradle-to-grave oversight of equipment management, and the technology needed to assist with creating and maintaining more robust internal controls, compliance, and timely audits. Efforts are underway that involve creating preventative internal controls, training of key personnel to help ensure that there is an end-to-end equipment lifecycle approach and accountability throughout an asset?s lifecycle, and the technology needed to support better location tracking of assets, the completion of audits, and recordkeeping. Finally, it is important to note that there has been a 31% year-over-year reduction in the total number of exceptions from thirty-six to twenty-five.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Finding No. 2022-008 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: $29,988 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. § T60-20-815 Section (c)(5) provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 equipment transactions tested, aggregating $29,988 of $59,723 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Condition, continued: 2. For 2 (or 40%), the custodian’s name and the condition of the equipment was not indicated on the property master information record for PS-012478-US and PS-047509-US, with a total amount tested of $4,872. Evidence that custodian records were matched and updated after physical inspection was not obtained. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $29,988. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-008 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: $29,988 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. § T60-20-815 Section (c)(5) provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 equipment transactions tested, aggregating $29,988 of $59,723 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Condition, continued: 2. For 2 (or 40%), the custodian’s name and the condition of the equipment was not indicated on the property master information record for PS-012478-US and PS-047509-US, with a total amount tested of $4,872. Evidence that custodian records were matched and updated after physical inspection was not obtained. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $29,988. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-009 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: $36,244 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. § T60-20-815 Section (c)(5) also provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 transactions tested, aggregating $36,244 of $243,308 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. 2. For 1 (or 20%), the following were noted for PS-039791-US, with amount tested of $3,332: a. The custodian’s name was not indicated on the property master information record from the JD Edwards system. Evidence that custodian records were matched and updated after physical inspection was not obtained. b. The property master information record states that the asset is in “working” condition, however, evidence obtained of a survey performed on August 8, 2022 has concluded that the asset is no longer useful for PSS operations and is recommended for destruction or scrapping. The same evidence showed that the destruction/scrapping occurred in September 15, 2022. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $36,244. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Identification as a repeat finding: 2021-005 Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-010 Federal Agency: U.S. Department of Education (ED) Assistance Listing No. and Title: 84.425 Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: $854,432 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. Condition: 1. As of September 30, 2022, the total amount of equipment acquired under ALN 84.425X per equipment schedule or subsidiary ledger was lower by $18,147 as compared to the total amount of equipment expenditures identified in the general ledger journal entry details supporting the SEFA. 2. For 10 (or 100%) of 10 equipment transactions tested, aggregating $854,432 of $2,296,719 in total amount of equipment costs identified as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $854,432. Identification as a repeat finding: 2021-004 Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-010 Federal Agency: U.S. Department of Education (ED) Assistance Listing No. and Title: 84.425 Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: $854,432 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. Condition: 1. As of September 30, 2022, the total amount of equipment acquired under ALN 84.425X per equipment schedule or subsidiary ledger was lower by $18,147 as compared to the total amount of equipment expenditures identified in the general ledger journal entry details supporting the SEFA. 2. For 10 (or 100%) of 10 equipment transactions tested, aggregating $854,432 of $2,296,719 in total amount of equipment costs identified as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $854,432. Identification as a repeat finding: 2021-004 Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-011 Federal Agency: U.S. Department of Health and Human Services Assistance Listing No. and Title: 93.600 Head Start; 93.600 COVID-19 Head Start Area: Equipment and Real Property Management Questioned Costs: $165,367 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. The 2022 OMB Compliance Supplement page 4-93.600-9 provides that property records must be maintained for equipment acquired under a federal award 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. Condition: For 5 (or 100%) of 5 equipment transactions tested, aggregating $165,367 of $176,733 in total amount of equipment costs as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $165,367. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-011 Federal Agency: U.S. Department of Health and Human Services Assistance Listing No. and Title: 93.600 Head Start; 93.600 COVID-19 Head Start Area: Equipment and Real Property Management Questioned Costs: $165,367 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. The 2022 OMB Compliance Supplement page 4-93.600-9 provides that property records must be maintained for equipment acquired under a federal award 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. Condition: For 5 (or 100%) of 5 equipment transactions tested, aggregating $165,367 of $176,733 in total amount of equipment costs as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $165,367. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-011 Federal Agency: U.S. Department of Health and Human Services Assistance Listing No. and Title: 93.600 Head Start; 93.600 COVID-19 Head Start Area: Equipment and Real Property Management Questioned Costs: $165,367 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. The 2022 OMB Compliance Supplement page 4-93.600-9 provides that property records must be maintained for equipment acquired under a federal award 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. Condition: For 5 (or 100%) of 5 equipment transactions tested, aggregating $165,367 of $176,733 in total amount of equipment costs as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $165,367. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-003 Federal Agency: U.S Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Federal Award No.: 3-68-0001-023-2020 Area: Equipment and Real Property Management Questioned Costs: $0 Criteria: In accordance with applicable equipment and real property management requirements, the Authority must comply with the following: •Under 2 CFR section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. •Under 2 CFR section 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. •Under 2 CFR section 200.313(d)(2), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. Conditions: 1.For 1 (or 100%) item tested, the Authority included description of the property, which is generic or limited (i.e., TO CAPITALISE THE NEW FIRE TRUCK) and related property records did not include serial number or identification number, federal award identification number, percentage of federal participation in the project costs for the federal award under which the property was acquired, and the location, use and condition of the property. 2.The Authority did not perform required physical inventory and reconciliation for all equipment and real properties acquired from Federal funds. 3.Furthermore, there is no control system to ensure adequate safeguards to prevent loss, damage, or theft of all equipment and real properties acquired from Federal funds. Cause: The Authority lacks internal control policies and procedures over compliance with applicable equipment and real property management requirements. Effect: The Authority is exposed to the risk of possible unauthorized use, misappropriation, and disposition of property without being noticed due to the lack of internal controls and proper supporting accounting records. No questioned costs are reported as we are unable to determine the quantitative impact to the program.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 009: Activities Allowed and Unallowed, Allowable Costs, Period of Performance (Compliance; Internal Controls Over Compliance) (Repeat Finding: 2018-006, 2019-008, 2020-008 and 2021-007) Significant Deficiency ALN 93.441 Indian Self Determination ALN 20.205 Highway Planning & Construction ALN 15.030 Indian Law Enforcement ALN 93.575 Child Care and Development Block Grant ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds (ARPA) Criteria: Uniform Guidance 2 CFR, Part §200.313(a) requires that non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During compliance requirement testing for Activities Allowed and Unallowed, Allowable Costs and Period of Performance for the above noted major programs, we selected 120 transactions for testing from each major program. The following number of transactions were not provided for our review during the audit: ALN 93.441 – Indian Self Determination – 47 transactions ALN 20.205 – Highway Planning and Construction - 11 transactions ALN 15.030 – Indian Law Enforcement – 8 transactions ALN 93.575 – Child Care and Development Block Grant – 22 transactions ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – 9 transactions Questioned Costs: ALN 93.441 – Indian Self Determination – $18,572 ALN 20.205 – Highway Planning and Construction - $9,133 ALN 15.030 – Indian Law Enforcement – $9,844 ALN 93.575 – Child Care and Development Block Grant – $6,713 ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds – $6,497 Cause: The Governmental Department did not maintain sufficient appropriate documentation for audit review. Effect: The Governmental Department is not in compliance with Activities Allowed and Unallowed, Allowable Costs and Period of Performance compliance requirements for the 5 major programs mentioned above. This could lead to sanctions by the funding agencies. Recommendation: We recommend the Governmental Department becomes familiar with the requirements of 2 CFR, Part §200.313(a) and establish appropriate internal control policies and procedures to ensure compliance with the requirements of Uniform Guidance and each major program. In addition, all staff should be trained on those policies and procedures so they are familiar with the requirements. We further recommend the Governmental Department does not process payment for disbursements that does not contain sufficient, appropriate supporting documentation and necessary approvals. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
2 CFR Sections 200.313 (c) through (e) require equipment having a useful life of more than one year and a per-unit acquisition cost which equal or exceeds $5,000 must be maintained in the Board’s property records. A computer server costing $29,500 was not properly classified as capitalized equipment and as such, was omitted from the Board’s Fixed Asset Inventory.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
2022-002 Equipment and Real Property Management Information on Federal Program: National Science Foundation (NSF) Cooperative Agreement Management and Operations of the National Radio Astronomy Observatory, Long Baseline Array and Atacama Large Millimeter Array (ALMA) ALN #: 47.049 Award #: AST-1519126 Award Year: 10/01/2016 ? 09/30/2026 Criteria ? 2 CFR Section 200.313(d)(3), Equipment, requires that recipients of federal awards develop and maintain an internal control system to ensure adequate safeguards to prevent loss, damage or theft of property acquired with federal funds. In addition, any loss, damage, or theft must be investigated. Condition ? During the year ended September 30, 2022, AUI identified an incident of theft of copper mesh at the ALMA construction site. AUI did not have adequate internal controls to prevent theft of property acquired with federal funds. AUI had implemented a limited system of internal control during a period of time due to the COVID pandemic but these controls failed to prevent property theft. In addition, it took several months for AUI to discover the theft due to the limited number of personnel onsite during the pandemic. Questioned Costs ? Below reporting threshold. Context ? This is a condition identified through AUI?s internal review and audit processes and was reported during our internal control assessment for the year ended September 30, 2022. Effect or Potential Effect ? This condition could result in unallowable expenses being charged to the federal award. Repeat Finding ? This is not a repeat finding. Cause ? Due to the shutdown caused by the COVID pandemic, limited internal controls were implemented by AUI to secure the federal property. Recommendation ? We recommend AUI comply with the Equipment compliance requirement at all times and enhance its policies and procedures to ensure adequate safeguards to prevent loss, damage or theft of property acquired with federal funds. Views of Responsible Officials ? As noted above in the Condition section, the theft of the copper mesh (which had an approximate cost of around $3,200) occurred at the height of the COVID pandemic. Despite the reduced staff and remote location of the site, controls were in place during this time period that prevented any additional losses from occurring. Despite the theft being an isolated incident, AUI put additional internal controls in place to mitigate the risk of this type of occurrence from happening in the future. These controls are described in detail in the Management?s Corrective Action Plan included as Appendix A of the attached Management Prepared Document Section.
Federal Agency: U.S. Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Program Grant Period: Year ended September 30, 2022 Criteria: 2 CFR 200.313(a)(2), 2 CFR 200.311(a), 2 CFR 200.311(b) Condition: Title to real property and equipment acquired with the federal award is held by the County per the management operating agreement. Cause: As described in Note 5 to the financial statements, the Expo manages the operations of the Expo Center on behalf of Bell County through a management agreement. Per the Expo?s management agreement, any buildings, fixtures, improvements, furniture, equipment, and tangible personal property on the Expo Center premises is the property of Bell County. The Expo maintains control of capital assets for use in the operations of the Expo. Bell County owns, insures, maintains, and repairs all capital assets on the Expo premises. Potential Effect: Instances of noncompliance with direct and material compliance requirement. Repeat Finding: No Management?s Response and Planned Corrective Action: The Expo maintains physical control of all capital assets acquired with federal awards. The Expo uses all capital assets acquired with federal awards in the operations of the Expo. The relationship with Bell County provides for high quality management of capital assets through County insurance and maintenance. The Expo believes their relationship with the County does not constitute noncompliance, as the Expo uses all capital assets in its continued operations. Responsible Person: Tim Stephens, Executive Director
Finding Number: 2022-007 Prior Year Finding Number: 2021-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Elementary and Secondary School Emergency Relief (ESSER) Fund ALN: 84.425D Award #: S425D210034 Award Year: 01/05/2021 ? 09/30/2022 COVID-19 ? Education Stabilization Fund American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER) ALN: 84.425U Award #: S425U210034-21A Award Year: 03/24/2021 ? 09/30/2023 Government Department/Agency: District of Columbia Public Schools Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Additionally, per the Uniform Guidance in 2 CFR Section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Further, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition ? We noted that DCPS has a policy to track and maintain a list of equipment purchased using federal funds with a single unit cost of $200 or more; and to conduct periodic equipment inventory count twice a year. Of the 56 out of 60 samples tested for equipment real property management requirements, we noted that: (1) Equipment purchased using federal funds with a single unit cost of $200 or more is tracked in the TIPWeb-IT system; however, there is no linkage between assets tracked in TIPWeb-IT and the funding source or Purchase Order. As a result, we were not able to verify that the equipment purchased using federal funds was being tracked in the TIPWeb-IT system. (2) There is no separate listing of equipment purchased using federal funds being maintained. (3) No physical inventory count was performed for equipment purchased using federal funds in 2022. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of District of Columbia Public School (DCPS)?s compliance with the specified requirements using a statistically valid sample. Effect ? There is a risk that inadequate recordkeeping of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Cause ? Due to a lack of linkage between procurement systems and asset management systems and COVID related concerns, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds. Recommendation ? We recommend that DCPS implement policies, procedures and controls that will ensure that equipment purchased using federal funds are tracked and maintained, in order to adhere to Federal regulations related to equipment and its related maintenance. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The District of Columbia Public School (DCPS) agrees with the conditions and recommendations of this finding. While DCPS has implemented and follows stringent asset procurement and management policies, we have adopted separate systems to track the purchasing, receiving, and the lifecycle of assets. The Procurement and ERP systems, PASS/SOAR are used to track purchases of assets, while the Warehouse receiving system captures a record of assets received by DCPS. The DCPS?s Asset Management System, TIPWeb tracks a device throughout its lifecycle (deployment/assignment, condition, location, disposal, etc.). This split system functionality contributes to the conditions noted in the audit findings. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-007 Prior Year Finding Number: 2021-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Elementary and Secondary School Emergency Relief (ESSER) Fund ALN: 84.425D Award #: S425D210034 Award Year: 01/05/2021 ? 09/30/2022 COVID-19 ? Education Stabilization Fund American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER) ALN: 84.425U Award #: S425U210034-21A Award Year: 03/24/2021 ? 09/30/2023 Government Department/Agency: District of Columbia Public Schools Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Additionally, per the Uniform Guidance in 2 CFR Section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Further, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition ? We noted that DCPS has a policy to track and maintain a list of equipment purchased using federal funds with a single unit cost of $200 or more; and to conduct periodic equipment inventory count twice a year. Of the 56 out of 60 samples tested for equipment real property management requirements, we noted that: (1) Equipment purchased using federal funds with a single unit cost of $200 or more is tracked in the TIPWeb-IT system; however, there is no linkage between assets tracked in TIPWeb-IT and the funding source or Purchase Order. As a result, we were not able to verify that the equipment purchased using federal funds was being tracked in the TIPWeb-IT system. (2) There is no separate listing of equipment purchased using federal funds being maintained. (3) No physical inventory count was performed for equipment purchased using federal funds in 2022. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of District of Columbia Public School (DCPS)?s compliance with the specified requirements using a statistically valid sample. Effect ? There is a risk that inadequate recordkeeping of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Cause ? Due to a lack of linkage between procurement systems and asset management systems and COVID related concerns, DCPS was unable to adequately support compliance with its policies and procedures regarding monitoring of equipment acquired with Federal funds. Recommendation ? We recommend that DCPS implement policies, procedures and controls that will ensure that equipment purchased using federal funds are tracked and maintained, in order to adhere to Federal regulations related to equipment and its related maintenance. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The District of Columbia Public School (DCPS) agrees with the conditions and recommendations of this finding. While DCPS has implemented and follows stringent asset procurement and management policies, we have adopted separate systems to track the purchasing, receiving, and the lifecycle of assets. The Procurement and ERP systems, PASS/SOAR are used to track purchases of assets, while the Warehouse receiving system captures a record of assets received by DCPS. The DCPS?s Asset Management System, TIPWeb tracks a device throughout its lifecycle (deployment/assignment, condition, location, disposal, etc.). This split system functionality contributes to the conditions noted in the audit findings. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
The Board used money from the COVID-19 Education Stabilization Fund to Purchase a computer server in excess of $5,000 and failed to include the server in the fixed asset inventory as required. 2 CFR Sections 200.313 (c) through (e) require equipment having a useful life of more than one year and a per-unit acquisition cost which equal or exceeds $5,000 must be maintained in the Board's property records. A computer server costing $40,440 was not properly classified as capitalized equipment and as such, was omitted from the Board's Fixed Asset Inventory. The Board should ensure that all equipment is properly recorded in the accounting records Fixed Asset Inventory.
Finding 2022-001: Equipment and Real Property Management (Repeat Finding 2021-001) Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0025-22 FR-AMT-0026-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations ? 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations ? 2 CFR 200.303 ? Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For one of the equipment samples reviewed, it was observed that the asset did not have a unique asset identifier in the originally provided equipment population. 2. For seventeen of the equipment samples reviewed, it was observed that for six of them, the Condition data or Location field in the asset records was blank and, for twelve equipment samples, the Location field and/or Condition data per the asset records did not match the actual physical location and/or condition of the asset. We understand that was due to the assets records not being updated in a timely manner with the actual status of the equipment in the field. 3. During our procedures performed for seven assets, we identified that no inventory had occurred for the asset, even though it had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs None. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. Exceptions as described in the Condition section above were noted for matters 2, 3 and 6 in the Criteria section above, indicating that internal controls were not functioning as designed. No exceptions were noted for matters 1, 4, or 5 in the Criteria section above. Amtrak has had the same repeat finding for the last several audit periods. As exceptions were noted related to matter 6 in the Criteria section above, Amtrak has not taken sufficient actions to address audit findings related to their equipment internal controls. Effect Amtrak is in non-compliance with the related grant agreement. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. Cause The nature of much of Amtrak?s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak?s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. In reviewing management?s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates ?Capital Accounting staff contact personnel in each department to obtain updated information pertaining to the observation of every two-year inventory process.? This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding was identified as a repeat finding in the immediate prior year as Finding 2021-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak?s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Amtrak recognizes that remediation of this finding will require an investment in the organization structure and the technology solutions available to the company. Since being created in early 2022 the Asset Management team has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. To mitigate this finding, resources and investments are needed to address policy and governance around single auditable assets, the people and processes needed for a cradle-to-grave oversight of equipment management, and the technology needed to assist with creating and maintaining more robust internal controls, compliance, and timely audits. Efforts are underway that involve creating preventative internal controls, training of key personnel to help ensure that there is an end-to-end equipment lifecycle approach and accountability throughout an asset?s lifecycle, and the technology needed to support better location tracking of assets, the completion of audits, and recordkeeping. Finally, it is important to note that there has been a 31% year-over-year reduction in the total number of exceptions from thirty-six to twenty-five.
Finding 2022-001: Equipment and Real Property Management (Repeat Finding 2021-001) Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0025-22 FR-AMT-0026-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations ? 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)). 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations ? 2 CFR 200.303 ? Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For one of the equipment samples reviewed, it was observed that the asset did not have a unique asset identifier in the originally provided equipment population. 2. For seventeen of the equipment samples reviewed, it was observed that for six of them, the Condition data or Location field in the asset records was blank and, for twelve equipment samples, the Location field and/or Condition data per the asset records did not match the actual physical location and/or condition of the asset. We understand that was due to the assets records not being updated in a timely manner with the actual status of the equipment in the field. 3. During our procedures performed for seven assets, we identified that no inventory had occurred for the asset, even though it had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs None. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. Exceptions as described in the Condition section above were noted for matters 2, 3 and 6 in the Criteria section above, indicating that internal controls were not functioning as designed. No exceptions were noted for matters 1, 4, or 5 in the Criteria section above. Amtrak has had the same repeat finding for the last several audit periods. As exceptions were noted related to matter 6 in the Criteria section above, Amtrak has not taken sufficient actions to address audit findings related to their equipment internal controls. Effect Amtrak is in non-compliance with the related grant agreement. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. Cause The nature of much of Amtrak?s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak?s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. In reviewing management?s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates ?Capital Accounting staff contact personnel in each department to obtain updated information pertaining to the observation of every two-year inventory process.? This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding was identified as a repeat finding in the immediate prior year as Finding 2021-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak?s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Amtrak recognizes that remediation of this finding will require an investment in the organization structure and the technology solutions available to the company. Since being created in early 2022 the Asset Management team has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. To mitigate this finding, resources and investments are needed to address policy and governance around single auditable assets, the people and processes needed for a cradle-to-grave oversight of equipment management, and the technology needed to assist with creating and maintaining more robust internal controls, compliance, and timely audits. Efforts are underway that involve creating preventative internal controls, training of key personnel to help ensure that there is an end-to-end equipment lifecycle approach and accountability throughout an asset?s lifecycle, and the technology needed to support better location tracking of assets, the completion of audits, and recordkeeping. Finally, it is important to note that there has been a 31% year-over-year reduction in the total number of exceptions from thirty-six to twenty-five.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Criteria or Specific Requirement - 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return Condition - During our testing of equipment and property inventory compliance, we identified three pieces of equipment with acquisition costs totaling $207,845 where the equipment was not added to the property records in the year of purchase. In addition, an inventory count for nine pieces of equipment totaling approximately $135,992 was not performed within the past two-years. Cause - Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal funds. Effect or Potential Effect - The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment and timely add equipment acquisitions to property records can result in noncompliance and potential loss of equipment procured with Federal funds. Questioned Costs - Not applicable as there were no questioned costs related to noncompliance. Context - This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted that three pieces of equipment were not added to the property records in the year of purchase. There was a total of 184 pieces of equipment over $5,000 added to property records in fiscal year 2022. The equipment identified had a value of $207,845 out of a total equipment and property value of $104,263,192. The nine pieces of equipment not counted within the past two-years totaled $135,992. Repeat Finding - This is not a repeat finding from the prior year. Recommendation - We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions ? Management agrees with this finding. Please refer to management?s corrective action plan.
Finding No. 2022-008 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: $29,988 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. § T60-20-815 Section (c)(5) provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 equipment transactions tested, aggregating $29,988 of $59,723 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Condition, continued: 2. For 2 (or 40%), the custodian’s name and the condition of the equipment was not indicated on the property master information record for PS-012478-US and PS-047509-US, with a total amount tested of $4,872. Evidence that custodian records were matched and updated after physical inspection was not obtained. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $29,988. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-008 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: $29,988 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. § T60-20-815 Section (c)(5) provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 equipment transactions tested, aggregating $29,988 of $59,723 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Condition, continued: 2. For 2 (or 40%), the custodian’s name and the condition of the equipment was not indicated on the property master information record for PS-012478-US and PS-047509-US, with a total amount tested of $4,872. Evidence that custodian records were matched and updated after physical inspection was not obtained. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $29,988. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-009 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: $36,244 Criteria: § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. § T60-20-815 Section (c)(5) also provides that the Procurement and Supply Department and the Fiscal and Budget Division along with the responsible school principals, program managers and site coordinators shall be responsible for taking an inventory of all fixed assets. During that inventory, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. All discrepancies between custodians and their respective fixed assets must be cleared by 90 days after the closing of the fiscal year. Further, § T60-20-815 Section (e) provides that the disposition of fixed assets shall be in accordance with procedures established by the Commissioner. Condition: Of 5 transactions tested, aggregating $36,244 of $243,308 in total amount of equipment identified under the program as of September 30, 2022: 1. For 5 (or 100%), no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. 2. For 1 (or 20%), the following were noted for PS-039791-US, with amount tested of $3,332: a. The custodian’s name was not indicated on the property master information record from the JD Edwards system. Evidence that custodian records were matched and updated after physical inspection was not obtained. b. The property master information record states that the asset is in “working” condition, however, evidence obtained of a survey performed on August 8, 2022 has concluded that the asset is no longer useful for PSS operations and is recommended for destruction or scrapping. The same evidence showed that the destruction/scrapping occurred in September 15, 2022. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $36,244. Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Identification as a repeat finding: 2021-005 Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.
Finding No. 2022-010 Federal Agency: U.S. Department of Education (ED) Assistance Listing No. and Title: 84.425 Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: $854,432 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. § 2 CFR 200.313(b) provides that a state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. PSS Rules and Regulations § T60-20-815 Inventory Requirements Section (c)(1) provides that a fixed asset at its inception shall be assigned to one individual, who will be responsible for the care and maintenance of the specified fixed asset. The employee, who is in direct control of the fixed asset (not the supervisor of the employee), and who is using the fixed asset, shall sign for the fixed asset. Refusal to sign as the custodian of a fixed asset shall prohibit the employee from custody of the fixed asset. Condition: 1. As of September 30, 2022, the total amount of equipment acquired under ALN 84.425X per equipment schedule or subsidiary ledger was lower by $18,147 as compared to the total amount of equipment expenditures identified in the general ledger journal entry details supporting the SEFA. 2. For 10 (or 100%) of 10 equipment transactions tested, aggregating $854,432 of $2,296,719 in total amount of equipment costs identified as of September 30, 2022, no evidence of custodian signature at inception of the fixed asset was provided. However, printed copies of the property master information record from the JD Edwards system were signed and dated by the custodian and a verifier as evidence of the most recent physical inspection in September 2022. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS’ existing fixed asset management policies are insufficient to ensure proper management of equipment and real property. Effect: PSS is in noncompliance with applicable equipment and real property requirements. The reportable questioned cost is $854,432. Identification as a repeat finding: 2021-004 Recommendation: PSS should improve its existing fixed asset management policies to align with the Federal requirements on equipment and real property management. The Office of Procurement and Supply should consider developing standard forms and templates that can be used to document compliance with recordkeeping, custodianship, and physical count policies. Views of responsible officials: PSS agrees with the finding and describes corrective actions in the PSS Corrective Action Plan.