Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Criteria: An institution must conduct a physical inventory of equipment and real property at least once every two years with results reconciled with the equipment and property records (2 CFR Section 200.313(d)(2)).Condition and Context: During our testwork over equipment and real property management, we requested support from management relating to their physical inventory of equipment and real property acquired with federal funds. We noted management was unable to produce such records, as a physical inventory of federal equipment and real property had not been conducted within the required two-year period.Cause and Effect: There was a lapse in the University's internal controls surrounding monitoring the physical inventory of equipment and real property acquired with federal funds. The University did not conduct their physical inventory of equipment and real property acquired with federal funds within the required two-year period.
Finding 2022-003: Equipment (50000)Assistance Listing No. 84.425 ? Education Stabilization Fund,Elementary and Secondary School Emergency Relief (ESSER) FundU.S. Department of EducationPassed through California Department of EducationCriteria: Consistent with 2 CFR section 200.311 (real property), section 200.313 (equipment), and section 200.439 (equipment and other capital expenditures) ESF funds may be used to purchase equipment. Capital expenditures for general and special purpose equipment purchases are subject to prior approval by ED or the pass-through entity.Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326).Condition: The District made three expenditures above the capital threshold for federal purchases but did not obtain prior approval from the California Department of Education. Furthermore, the District was unable to provide documentation that federal wage rate requirements were included in the contracts.Question Costs: $66,608Context: These were the only capital purchases made from this federal program in the year under audit.Cause: The District was unaware of the requirements to obtain prior approval from CDE and to obtain federal wage rate data.Effect: The funds spent on these purchases may be subject to review by or return to the awarding agency.Recommendation: We recommend that the District obtain prior approval from CDE and that contracts include federal wage rate requirements for all capital purchases from the Education Stabilization Fund.Views of Responsible Officials: The District will ensure it receives prior approval from CDE prior to making expenditures utilizing ESSER funds and will update its agreements to reflect the federal wage rate requirements when utilizing this funding.
2 CFR section 200.313(d) Equipment Management Requirements requires that (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years. During our audit procedures over the compliance requirement of equipment management we noted that the physical inventory of the property and equipment has not been reconciled with the general ledger of the accounting records. We identified certain additions in the general ledger that were not included in the inventory and noted inconsistencies in the period in which the additions were recorded in the general ledger and the acquisition date per the physical inventory report. The lack of reconciliation of the physical inventory and the general ledger may cause errors in the accounting records and/or misuse of the equipment purchased with federal funds that may result in questioned costs. This situation is caused by the lack of adequate internal control procedures for reconciling and analyzing the financial transactions related to capital assets recorded throughout the year.
Finding 2022-007 Assistance Listing Number: 19.510 Program Title: U.S. Refugee Admissions Program Agency: U.S. Department of State Pass-Through Entity: United States Conference of Catholic Bishops Federal Award Identification Number: SPRMCO21CA3001, SPRMCO22CA0023 and SPRMCO21CA3291 Compliance Requirements: Equipment and Real Property Criteria: In accordance with Title 2 CFR Part 200.313(d)(1), Title 2 CFR Part 200.313(d)(2), and the U.S. Department of State Cooperative Agreement, a physical inventory and inventory report is required to be submitted 30 days prior to the expiration of the Cooperative Agreement that lists all items and purchase price of all non-expendable tangible personal property having a useful life of more than one year and having a current per unit fair market value of $5,000 or more per unit. The report must include a description, date of purchase, serial number, and the country in which the item was used. Condition: A physical inventory of equipment and real property purchased under the federal program is not being performed. An inventory report is not being submitted to the federal agency. Effect: A physical inventory and an inventory report was not submitted to the federal agency. Context: Total equipment charged to the federal program was $70,082 for the year ended June 30, 2022. Repeat Finding: Not applicable. Recommendation: We recommend Catholic Charities review current policies and procedures surrounding equipment and real property management and establish procedures related to physical inventory and retention of data required under Uniform Guidance. Views of the Responsible Officials: Catholic Charities of Central and Northern Missouri agrees and is currently reviewing policies and procedures surrounding equipment and real property management and physical inventory and data retention as required under Uniform Guidance.
Equipment/Real Property Management Federal Award Identification Assistance Listing Program Title: Formula Grants for Rural Areas Assistance Listing Program Number: 20.509 Federal Award ID Number and Year: Various Federal Agency: U.S. Department of Transportation Pass-Through Entity: Nebraska Department of Transportation Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property (2 CFR 200.313(d)(1)). 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)). Condition The Organization lacked certain required elements on its vehicle listing. The Organization failed to adequately document the performance of the required physical inventory. Repeat Finding No. Cause Procedures within the Organization were inadequate to ensure that required elements are regularly updated on its vehicle listing, and that the physical inventory count and reconciliation is documented. Effect or Potential Effect Federal interests in property are lost or inadequately tracked. Questioned Costs No. Statistical Sample No. Context Nebraska Department of Transportation provides its subrecipients with an online portal through which, among other things, a vehicle listing is kept. The auditor obtained this vehicle listing, noting that most of the elements required by 2 CFR 200.313(d)(1) were present, however, out of the seven federally-funded vehicles on the listing: - Two were missing the FAIN (VINs *8494 and *2891). - One had a total purchase price of $63,670, whereas source documentation suggested a total purchase price of $103,475 (VIN *2891). - One was missing a purchase price. Source documentation suggested a total purchase price of $36,231 (VIN *2472). - One had an acquisition date of 9/30/2019, whereas source documentation suggested an acquisition date of 2/25/2020 (VIN *2891). Management indicates that a physical inventory is performed nightly with all vehicles, however, no documentation exists to prove that this was performed during the audit period. Recommendation We recommend the Organization establish a system of internal control consisting of policies and procedures whereby the individual maintaining vehicle listings is different from the individual updating the Nebraska Department of Transportation online portal. Additionally, we recommend the Organization track all Federally-required elements along with its own internal data points (such as bus number and depreciation system number) in one consolidated listing. Further, we recommend that a policy be instituted whereby a physical inventory and related reconciliation is performed annually on June 30, with the results being documented, reviewed, and approved by appropriate personnel. Views of Responsible Officials See Corrective Action Plan, below.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
2022-006 Property Management Material Weakness CONDITION: It was noted during the audit that documentation for a detailed listing of fixed assets, a depreciation schedule and periodic inventories for fixed assets have not been maintained. CRITERIA: Federal funding agencies require maintenance of a property management system to meet statutory requirements set forth under funding contracts 2 CFR 200.313(d)(1) outline the requirements of a property management system. CAUSE: Lack of existing policies & procedures and staffing issues have contributed to this condition. EFFECT: Weak internal controls over fixed assets limits the School’s ability to properly report and safeguard its assets. Assets could be taken from the School, and it go undetected for a long period of time or never be detected at all. Weak controls also significantly increase the risk of financial misstatement occurring. Insufficient or excessive insurance coverage could result as well.
Finding Reference Number: SA 2022-006 Equipment Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: 2 CFR 200.313(d)(1) require that property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. In addition, 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: During fiscal year 2022, the City purchased equipment in the amount of $97,933, which is reflected in the City’s capital asset records. However, those records do not include an indication that the funding source was a federal grant. The City did not yet perform the physical inventory of the federally funded property, because the purchase occurred during fiscal year 2022. Effect: The City is not in compliance with the property management provisions of 2 CFR 200.313(d)(1). Cause: We understand City staff was not aware of the property records requirement to include the federal funding source. We also understand the capital assets the system has the capability to include such a designation, but it has not been utilized to date. Recommendation: The City should develop procedures to ensure that equipment and other capital assets purchased in whole or in part with federal funds include an identification of the federal funding in compliance with the provisions of 2 CFR 200.313(d)(1). In addition, the City should ensure that procedures are in place meet the physical inventory requirements of 2 CFR section 200.313(d)(2). View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding Reference Number: SA 2022-006 Equipment Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: 2 CFR 200.313(d)(1) require that property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. In addition, 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: During fiscal year 2022, the City purchased equipment in the amount of $97,933, which is reflected in the City’s capital asset records. However, those records do not include an indication that the funding source was a federal grant. The City did not yet perform the physical inventory of the federally funded property, because the purchase occurred during fiscal year 2022. Effect: The City is not in compliance with the property management provisions of 2 CFR 200.313(d)(1). Cause: We understand City staff was not aware of the property records requirement to include the federal funding source. We also understand the capital assets the system has the capability to include such a designation, but it has not been utilized to date. Recommendation: The City should develop procedures to ensure that equipment and other capital assets purchased in whole or in part with federal funds include an identification of the federal funding in compliance with the provisions of 2 CFR 200.313(d)(1). In addition, the City should ensure that procedures are in place meet the physical inventory requirements of 2 CFR section 200.313(d)(2). View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(c) through (d) which require that: (c) Equipment must be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency. (d) Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: 1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the 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 2 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. The School District failed to properly track assets purchased or improvements completed with ESF (specifically Elementary and Secondary School Emergency Relief (ESSER)) funds in their Equipment Inventory System. In addition, support was not provided that the required physical inventory of equipment was being performed. The School District Treasurer should review the Equipment Inventory System and adjust it to include all assets purchased with ESSER Funds. The School District should establish procedures to ensure the required physical inventories are being performed and reconciled with the Equipment Inventory System at least every two years.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(c) through (d) which require that: (c) Equipment must be used in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award or, when appropriate, under other Federal awards; however, the non-Federal entity must not encumber the equipment without prior approval of the Federal awarding agency. (d) Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: 1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the 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 2 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. The School District failed to properly track assets purchased or improvements completed with ESF (specifically Elementary and Secondary School Emergency Relief (ESSER)) funds in their Equipment Inventory System. In addition, support was not provided that the required physical inventory of equipment was being performed. The School District Treasurer should review the Equipment Inventory System and adjust it to include all assets purchased with ESSER Funds. The School District should establish procedures to ensure the required physical inventories are being performed and reconciled with the Equipment Inventory System at least every two years.
FA 2022-001 Strengthen Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE was responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,979,815.88 were expended and reported on the Ben Hill County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2021. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER programs within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: The following deficiencies were noted when reviewing the ESSER program: • 12 pieces of equipment with costs totaling $347,619.04, which were purchased with program funds, were not included on the federal program’s equipment listing. • The related expenditures for seven equipment additions with costs totaling $156,067.46 were not appropriately approved by GaDOE through the Consolidated Application process. Further, the expenditures were not submitted for approval on an amended budget as of the end of audit fieldwork. Cause: Issues were a result of inadequate controls and review procedures over equipment. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. Management should also implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. In addition, the School District should also revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. Management should also develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE was responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $6,979,815.88 were expended and reported on the Ben Hill County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2021. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER programs within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: The following deficiencies were noted when reviewing the ESSER program: • 12 pieces of equipment with costs totaling $347,619.04, which were purchased with program funds, were not included on the federal program’s equipment listing. • The related expenditures for seven equipment additions with costs totaling $156,067.46 were not appropriately approved by GaDOE through the Consolidated Application process. Further, the expenditures were not submitted for approval on an amended budget as of the end of audit fieldwork. Cause: Issues were a result of inadequate controls and review procedures over equipment. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Additionally, failure to verify compliance with applicable policies and regulations, including reviewing approved budgets prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. Management should also implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. In addition, the School District should also revise current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. Management should also develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
2022-001 – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Headstart Cluster CFDA Number: 93.600 Federal Award Identification number: N/A Pass Through Entity: N/A Award Year: 2022 Condition: The Entity did not conduct a physical inventory in current year or prior year. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. Questioned costs: None Effect: The Entity could dispose of or lose federally funded equipment without following federal guidelines. Cause: The Entity does not have policies and procedures to ensure that the Entity is performing a physical inventory at a minimum of every two years.
2022-001 – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Headstart Cluster CFDA Number: 93.600 Federal Award Identification number: N/A Pass Through Entity: N/A Award Year: 2022 Condition: The Entity did not conduct a physical inventory in current year or prior year. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. Questioned costs: None Effect: The Entity could dispose of or lose federally funded equipment without following federal guidelines. Cause: The Entity does not have policies and procedures to ensure that the Entity is performing a physical inventory at a minimum of every two years.
FA 2022-02 Strengthen Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Equipment and Real Property Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021), S425Q210012 (Year 2021) Questioned Costs: $192,004.45 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures and equipment as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to the coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,287,369.95 were expended and reported on the Telfair County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, as a condition of receiving federal subawards from the GaDOE, LEAs are required to prepare an annual budget that reflects how funding will be expended. This budget is submitted in the Consolidated Application system and is required to be reviewed and approved by the GaDOE program and grants management prior to expending federal program funds. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Lastly, provisions included in the Uniform Guidance, Section 200.313 - Equipment state that "equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the Federal award, and the non-Federal entity must not encumber the property without prior approval of the Federal awarding agency." Condition: A sample of 23 nonpersonal services expenditures was randomly selected for testing using a nonstatistical sampling approach. In addition, six individually significant expenditures were selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Furthermore, all equipment items purchased during the period under review were selected for testing to ensure approval was obtained from GaDOE prior to the purchase of the equipment. The following deficiencies were noted: • Two randomly selected expenditures totaling $7,678.24 were not appropriately approved by GaDOE through the Consolidated Application process as required. • Two individually significant items totaling $99,628.33 were not appropriately approved by GaDOE through the Consolidated Application process as required. • The purchase of two servers totaling $35,022.88 was not appropriately approved by GaDOE through the Consolidated Application process as required. • Bonuses totaling $43,900.00 were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Questioned Costs: Upon testing a sample of $142,102.78 in nonpersonal services expenditures, known questioned costs of $7,678.24 were identified. Using the population being sampled, which totaled $279,079.35, we project the likely questioned costs to be approximately $15,079.50. In addition, known questioned costs identified for unallowable/undocumented payments associated with individually significant items tested totaled $184,326.21; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $192,004.45 and $199,405.71, respectively. Cause: Per discussion with management, the School District believed that the bonuses were allowable as the expenditures were approved by GaDOE through the Consolidated Application process; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. In discussing the expenditures not approved on the Consolidated Application, they stated that the School District management did not update the ESSER Consolidated Application system prior to expending the funds for a different purpose. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing and employee compensation policies and procedures. Views of Responsible Officials: The School District does not agree with this finding. The School District feels this was an isolated incident due to the unique circumstances of this atypical grant. All documentation required by the vendors used was provided. The School District believes GaDOE guidelines and district Board approved procedures were followed on all expenditures except for a portion of the bonuses referenced. Auditor’s Concluding Remarks: School District personnel state that the School District “believes GaDOE guidelines and district Board approved procedures were followed”. While the expenditures may be allowable in nature, the School District is still required to get approval from GaDOE to be allowable per the Uniform Guidance. School Districts are expected and required to comply with federal regulations associated with the federal program. When each federal program budget is submitted to GaDOE, School District management signs assurances certifying that “each program will be administered in accordance with all applicable statutes, internal controls in the procurement process for goods and services in accordance with Georgia’s Financial Management for Georgia LUAS Manual.” As noted previously, the School District did follow appropriate procurement policies and procedures. We reaffirm our finding and will review the status of the finding during our next audit.