Criteria or specific requirement: Per ?200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (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. Per the Organization's additions to Property and Equipment Policy, expenditures for tangible assets used actively in business operations with a cost exceeding $5,000 and with a useful life exceeding two years should be capitalized. Also per ?200.313, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: We noted the Organization is not in compliance with requirements related to the Equipment/Real Property Management of grants. Questioned costs: None. Context: During our testing, we noted the following exceptions: ? 1 out of 2 equipment samples totaling $13,306 was not capitalized and therefore not included in the either the departments fixed asset software or year end Property and Equipment financial balance. This asset was originally purchased in fiscal year 2021. As such, the auditor could not trace the equipment to a listing and properly identify the equipment through physical inspection. ? The organization did not complete the required 2 year physical inventory of equipment for 1 out of 1 federally purchased equipment. The equipment was originally purchased in June 2020. ? The Organization was not aware of the Equipment/Real Property Management CFR Requirements and lacks a process to ensure the Organization is in compliance with Equipment/Real Property Management CFR requirements. Cause: Management oversight; lack of effective internal controls addressing the purchase of equipment with Federal Funds. Effect: The auditor noted instances of noncompliance. Noncompliance can result in delayed reimbursement of eligible Federal expenditures or potential loss of Federal funding. Repeat Finding: Yes ? 2021-001 Recommendation: We recommend that the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization did have two purchases in FY21 that were expensed versus being capitalized. The Organization failed to follow the capital purchasing policy. The Organization has educated responsible parties of the capital purchasing policy to avoid future occurrences. The Organization has updated processes in fiscal year 2023 to ensure the purchasing policy is followed. The executive director of the program will conduct an annual physical inventory of federal purchased equipment.
Criteria or specific requirement: Per ?200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (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. Per the Organization's additions to Property and Equipment Policy, expenditures for tangible assets used actively in business operations with a cost exceeding $5,000 and with a useful life exceeding two years should be capitalized. Also per ?200.313, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: We noted the Organization is not in compliance with requirements related to the Equipment/Real Property Management of grants. Questioned costs: None. Context: During our testing, we noted the following exceptions: ? 1 out of 2 equipment samples totaling $13,306 was not capitalized and therefore not included in the either the departments fixed asset software or year end Property and Equipment financial balance. This asset was originally purchased in fiscal year 2021. As such, the auditor could not trace the equipment to a listing and properly identify the equipment through physical inspection. ? The organization did not complete the required 2 year physical inventory of equipment for 1 out of 1 federally purchased equipment. The equipment was originally purchased in June 2020. ? The Organization was not aware of the Equipment/Real Property Management CFR Requirements and lacks a process to ensure the Organization is in compliance with Equipment/Real Property Management CFR requirements. Cause: Management oversight; lack of effective internal controls addressing the purchase of equipment with Federal Funds. Effect: The auditor noted instances of noncompliance. Noncompliance can result in delayed reimbursement of eligible Federal expenditures or potential loss of Federal funding. Repeat Finding: Yes ? 2021-001 Recommendation: We recommend that the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization did have two purchases in FY21 that were expensed versus being capitalized. The Organization failed to follow the capital purchasing policy. The Organization has educated responsible parties of the capital purchasing policy to avoid future occurrences. The Organization has updated processes in fiscal year 2023 to ensure the purchasing policy is followed. The executive director of the program will conduct an annual physical inventory of federal purchased equipment.
2021-003 – ALLOWABLE COSTS/COST PRINCIPLES-PAYROLL DOCUMENTATION (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (3) In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day. 2 CFR 200.313 stipulates the identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. Typical costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs that otherwise would be treated as indirect costs may also be considered direct costs. 2 CFR 200.414 stipulates that because of the diverse characteristics and accounting practices of nonprofit organizations, it is not possible to specify the types of cost which may be classified as indirect (F&A) cost in all situations. Identification with a Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. However, typical examples of indirect (F&A) cost for many nonprofit organizations may include depreciation on buildings and equipment, the costs of operating and maintaining facilities, and general administration and general expenses, such as the salaries and expenses of executive officers, personnel administration, and accounting. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-003 – ALLOWABLE COSTS/COST PRINCIPLES-PAYROLL DOCUMENTATION (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Condition: All employees paid with federal funds are paid a fixed salary pursuant to an employment contract established prior to the calendar year. Estimates for salaries were made prior to the services being performed. However, there was a lack of documentation, which substantiates that the payroll charged was accurate, allowable and properly allocated. Furthermore, there was no documentation of days or hours worked per day in accordance with federal guidelines. Officials recorded all personnel costs as indirect (which is consistent with the treatment of these expenses in prior years) expenses. However, the budget award document indicates a large portion of personnel costs to be classified as direct charges. Questioned Costs: Unknown. Context: Salaries and related fringe benefits of $576,127 were expended under the federal award. Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848. Cause: Internal controls and procedures related to the payroll documentation were not effectively designed or performed. Effect: National Center for the Advancement of STEM Education, Inc. is not in compliance with the documentation requirements related to salaries and wages. Recommendation: We recommend that management implement policies and procedures to ensure that documentation of salaries and wages are maintained in a manner consistent with federal requirements. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-003 – ALLOWABLE COSTS/COST PRINCIPLES-PAYROLL DOCUMENTATION (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. (3) In accordance with Department of Labor regulations implementing the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the salaries and wages of nonexempt employees, in addition to the supporting documentation described in this section, must also be supported by records indicating the total number of hours worked each day. 2 CFR 200.313 stipulates the identification with the Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. Typical costs charged directly to a Federal award are the compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award. If directly related to a specific award, certain costs that otherwise would be treated as indirect costs may also be considered direct costs. 2 CFR 200.414 stipulates that because of the diverse characteristics and accounting practices of nonprofit organizations, it is not possible to specify the types of cost which may be classified as indirect (F&A) cost in all situations. Identification with a Federal award rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect (F&A) costs of Federal awards. However, typical examples of indirect (F&A) cost for many nonprofit organizations may include depreciation on buildings and equipment, the costs of operating and maintaining facilities, and general administration and general expenses, such as the salaries and expenses of executive officers, personnel administration, and accounting. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-003 – ALLOWABLE COSTS/COST PRINCIPLES-PAYROLL DOCUMENTATION (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Condition: All employees paid with federal funds are paid a fixed salary pursuant to an employment contract established prior to the calendar year. Estimates for salaries were made prior to the services being performed. However, there was a lack of documentation, which substantiates that the payroll charged was accurate, allowable and properly allocated. Furthermore, there was no documentation of days or hours worked per day in accordance with federal guidelines. Officials recorded all personnel costs as indirect (which is consistent with the treatment of these expenses in prior years) expenses. However, the budget award document indicates a large portion of personnel costs to be classified as direct charges. Questioned Costs: Unknown. Context: Salaries and related fringe benefits of $576,127 were expended under the federal award. Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848. Cause: Internal controls and procedures related to the payroll documentation were not effectively designed or performed. Effect: National Center for the Advancement of STEM Education, Inc. is not in compliance with the documentation requirements related to salaries and wages. Recommendation: We recommend that management implement policies and procedures to ensure that documentation of salaries and wages are maintained in a manner consistent with federal requirements. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-007 — Equipment and Real Property Management Federal/state program information: Funding agency: U.S. Department of Health and Human Services Title: Indian Self-Determination ALN: 93.441 Award period: 10/1/2020 – 9/30/2021 Criteria: 2 CFR section 200.313 requires that (1) equipment be used in the program or project for which it was acquired as long as needed, (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, and cost of the property, and (3) a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Additionally, CBNHC’s Financial Policies and Procedures require a physical inventory of property be taken annually and reconciled to the general ledger. Condition: CBNHC has not completed a physical inventory of property and equipment in the last two years. Context: N/A Questioned Costs: None Cause: CBNHC was significantly impacted by the COVID-19 pandemic. Additionally, CBNHC is not implementing their Financial Policies and Procedures to ensure that a physical inventory has been taken annually and reconciled to the general ledger. Effect: CBNHC is not in compliance with equipment and real property management requirements for the Indian Self-Determination program. Auditor’s Recommendations: CBNHC should implement its Financial Policies and Procedures and plan a physical inventory of its property as quickly as possible. The results of the physical inventory should be reconciled to the general ledger. Management’s Response: CBNHC did not have the adequate financial or administrative staff to perform a physical inventory and therefore has not been keeping with its Financial Policies and Procedures and performing an annual physical inventory.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding Number: 2021-008 Prior Year Finding Number: 2020-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program ALN: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.
Finding Number: 2021-008 Prior Year Finding Number: 2020-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program ALN: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.
2021-007 — Equipment and Real Property Management Federal/state program information: Funding agency: U.S. Department of Health and Human Services Title: Indian Self-Determination ALN: 93.441 Award period: 10/1/2020 – 9/30/2021 Criteria: 2 CFR section 200.313 requires that (1) equipment be used in the program or project for which it was acquired as long as needed, (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, and cost of the property, and (3) a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Additionally, CBNHC’s Financial Policies and Procedures require a physical inventory of property be taken annually and reconciled to the general ledger. Condition: CBNHC has not completed a physical inventory of property and equipment in the last two years. Context: N/A Questioned Costs: None Cause: CBNHC was significantly impacted by the COVID-19 pandemic. Additionally, CBNHC is not implementing their Financial Policies and Procedures to ensure that a physical inventory has been taken annually and reconciled to the general ledger. Effect: CBNHC is not in compliance with equipment and real property management requirements for the Indian Self-Determination program. Auditor’s Recommendations: CBNHC should implement its Financial Policies and Procedures and plan a physical inventory of its property as quickly as possible. The results of the physical inventory should be reconciled to the general ledger. Management’s Response: CBNHC did not have the adequate financial or administrative staff to perform a physical inventory and therefore has not been keeping with its Financial Policies and Procedures and performing an annual physical inventory.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding No. 2021-018 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b)), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and procedures. The CNMI Property Management Policies and Procedures requires the Division of Procurement & Supply (PS) to conduct an annual inventory of property held by a designated official who has administrative control over the use of personal property within his area of jurisdiction. Also, PS shall perform random audits of property held by each accountable person to validate the integrity of the property control process. Further, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: 1. Tests of internal controls noted that a complete physical inventory of equipment and property was not performed by PS in FY 2021. 2. A property listing was provided by PS; however, information such as the federal award identification number, source of the property, who holds title, percentage of federal participation in the cost of the property, and use of the property, was not documented. 3. A variance of $415,046 was noted between the general ledger details of $665,165 of capital assets and $250,119 per the property listing provided by PS. Cause: The CNMI lacks the human resources and financial management system structure needed to effect compliance with applicable equipment and real property management requirements. Finding No. 2021-018, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D14AP00037, D16AP00064 D16AP00065, D17AP00111, D18AP00031, D18AP00130, D18AP00146, D18AP00165, D20AP00099, D20AP00119, and D21AP10003 Area: Equipment and Real Property Management Questioned Costs: $-0- Effect: The CNMI is in noncompliance with applicable equipment and real property management requirements. See below for the cumulative dollar amount of property and equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2020-030 Recommendation: The CNMI should consider seeking technical and financial support from Federal agencies to develop human resources and a financial management system capable of effecting compliance with applicable property management policies and procedures. Views of responsible officials: Conditions 1 and 2 – The CNMI Corrective Action Plan states agreement. Condition 3 - The Division of Procurement Services disagrees with this finding. The Division of Procurement Services, Property Management wasn't informed of this audit parameter. For FY2021 number of Transactions/Units processed was 4970 units and the dollar value is $9,526,239. Auditor Response: Condition 3 - The request was for the inventory listing as of 09/30/21 fiscal year end. Further, the dollar amount of the equipment and property are all capital assets in excess of $5,000.
Finding Number: 2021-008 Prior Year Finding Number: 2020-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program ALN: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.
Finding Number: 2021-008 Prior Year Finding Number: 2020-008 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program ALN: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria: In accordance with 2 CFR 200.303, the College must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the College is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The College did not have the percentage of federal participation in the project costs for the federal award under which the property was acquired in the property records. Questioned Costs: None. Context: During our testing of property and equipment purchases, it was noted that the modular building purchased with federal funds did not have the percentage of federal participation included in the property records. For the year ended June 30, 2021, costs for the purchase of the modular building were $227,056, all of which were from federal funds. Additionally, the property had not been tagged as having been purchased with federal funds. Cause: The College did not have the percentage of federal participation as part of their property and equipment records. Effect: The College did not meet equipment property record requirements for equipment purchased with federal funds. Repeat Finding: No Recommendation: We recommend the College implement policies and procedures to ensure all property and equipment purchased with federal funds includes such information in the property records to comply with the requirement. Views of responsible officials: Management agrees with the finding and has prepared a plan to correct the finding.
Criteria: In accordance with 2 CFR 200.303, the College must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the College is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The College did not have the percentage of federal participation in the project costs for the federal award under which the property was acquired in the property records. Questioned Costs: None. Context: During our testing of property and equipment purchases, it was noted that the modular building purchased with federal funds did not have the percentage of federal participation included in the property records. For the year ended June 30, 2021, costs for the purchase of the modular building were $227,056, all of which were from federal funds. Additionally, the property had not been tagged as having been purchased with federal funds. Cause: The College did not have the percentage of federal participation as part of their property and equipment records. Effect: The College did not meet equipment property record requirements for equipment purchased with federal funds. Repeat Finding: No Recommendation: We recommend the College implement policies and procedures to ensure all property and equipment purchased with federal funds includes such information in the property records to comply with the requirement. Views of responsible officials: Management agrees with the finding and has prepared a plan to correct the finding.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program Criteria: Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR section 200.313(d)(3)). 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient 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/Context: During the audit, we noted that a physical inventory of the School’s property had not been taken and reconciled with the property records within the last two years. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: There was turnover in the School’s key accounting staff. Effect: Property records may not be accurate and proper custodianship of the property is compromised. Questioned Costs: N/A. Repeat Finding: Yes, 2020-001. Recommendation: We recommend that the School develop policies and procedures requiring a physical inventory of the School’s property at least once every two years, and reconcile the results of the inventory to the property records. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program: Charter School Programs Assistance Listing Number: 84.282 Federal Agency: U.S. Department of Education Pass-Through Grantor: New York State Education Department Award Identification: C403558 Criteria: Equipment and Real Property Management – The School must perform a physical inventory of federally funded property, and the results must be reconciled with property records at least once every two years. 2 CFR Section 200.313 Condition: During the course of our audit procedures performed on equipment and real property management, it was noted that management did not perform a physical inventory of federally funded property. Questioned costs: None Context: Management was unable to provide documentation to support that a physical inventory was performed. Effect: We were unable to verify compliance with equipment and real property management requirements. Cause: The School did not have adequate controls and procedures in place related to equipment and real property management. Repeat finding: This is not a repeat finding.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY21 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2020-002. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria: In accordance with 2 CFR 200.303, the College must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the College is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The College did not have the percentage of federal participation in the project costs for the federal award under which the property was acquired in the property records. Questioned Costs: None. Context: During our testing of property and equipment purchases, it was noted that the modular building purchased with federal funds did not have the percentage of federal participation included in the property records. For the year ended June 30, 2021, costs for the purchase of the modular building were $227,056, all of which were from federal funds. Additionally, the property had not been tagged as having been purchased with federal funds. Cause: The College did not have the percentage of federal participation as part of their property and equipment records. Effect: The College did not meet equipment property record requirements for equipment purchased with federal funds. Repeat Finding: No Recommendation: We recommend the College implement policies and procedures to ensure all property and equipment purchased with federal funds includes such information in the property records to comply with the requirement. Views of responsible officials: Management agrees with the finding and has prepared a plan to correct the finding.
Criteria: In accordance with 2 CFR 200.303, the College must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the College is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The College did not have the percentage of federal participation in the project costs for the federal award under which the property was acquired in the property records. Questioned Costs: None. Context: During our testing of property and equipment purchases, it was noted that the modular building purchased with federal funds did not have the percentage of federal participation included in the property records. For the year ended June 30, 2021, costs for the purchase of the modular building were $227,056, all of which were from federal funds. Additionally, the property had not been tagged as having been purchased with federal funds. Cause: The College did not have the percentage of federal participation as part of their property and equipment records. Effect: The College did not meet equipment property record requirements for equipment purchased with federal funds. Repeat Finding: No Recommendation: We recommend the College implement policies and procedures to ensure all property and equipment purchased with federal funds includes such information in the property records to comply with the requirement. Views of responsible officials: Management agrees with the finding and has prepared a plan to correct the finding.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program Criteria: Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR section 200.313(d)(3)). 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient 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/Context: During the audit, we noted that a physical inventory of the School’s property had not been taken and reconciled with the property records within the last two years. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: There was turnover in the School’s key accounting staff. Effect: Property records may not be accurate and proper custodianship of the property is compromised. Questioned Costs: N/A. Repeat Finding: Yes, 2020-001. Recommendation: We recommend that the School develop policies and procedures requiring a physical inventory of the School’s property at least once every two years, and reconcile the results of the inventory to the property records. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program: Charter School Programs Assistance Listing Number: 84.282 Federal Agency: U.S. Department of Education Pass-Through Grantor: New York State Education Department Award Identification: C403558 Criteria: Equipment and Real Property Management – The School must perform a physical inventory of federally funded property, and the results must be reconciled with property records at least once every two years. 2 CFR Section 200.313 Condition: During the course of our audit procedures performed on equipment and real property management, it was noted that management did not perform a physical inventory of federally funded property. Questioned costs: None Context: Management was unable to provide documentation to support that a physical inventory was performed. Effect: We were unable to verify compliance with equipment and real property management requirements. Cause: The School did not have adequate controls and procedures in place related to equipment and real property management. Repeat finding: This is not a repeat finding.
Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition During our audit we noted a lack of required property records to support that compliance with equipment and real property management compliance requirements was being achieved. Cause Management was not aware of the governance compliance requirements specific to the Head Start Cluster, thus did not maintain a proper filing system for property records as required by equipment and real property management compliance requirements. Effect The effect of this condition is that equipment purchased with Head Start Cluster funds could be considered unallowed resulting in a request for the funds to be returned. Recommendation We recommend that a proper filing system that handles both hard copy and electronic supporting documents be implemented. We further recommend that document management software or application be utilized to help maintain supporting documentation of financial accounting records. Management Response See corrective action plan.
Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition During our audit we noted a lack of required property records to support that compliance with equipment and real property management compliance requirements was being achieved. Cause Management was not aware of the governance compliance requirements specific to the Head Start Cluster, thus did not maintain a proper filing system for property records as required by equipment and real property management compliance requirements. Effect The effect of this condition is that equipment purchased with Head Start Cluster funds could be considered unallowed resulting in a request for the funds to be returned. Recommendation We recommend that a proper filing system that handles both hard copy and electronic supporting documents be implemented. We further recommend that document management software or application be utilized to help maintain supporting documentation of financial accounting records. Management Response See corrective action plan.
Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition During our audit we noted a lack of required property records to support that compliance with equipment and real property management compliance requirements was being achieved. Cause Management was not aware of the governance compliance requirements specific to the Head Start Cluster, thus did not maintain a proper filing system for property records as required by equipment and real property management compliance requirements. Effect The effect of this condition is that equipment purchased with Head Start Cluster funds could be considered unallowed resulting in a request for the funds to be returned. Recommendation We recommend that a proper filing system that handles both hard copy and electronic supporting documents be implemented. We further recommend that document management software or application be utilized to help maintain supporting documentation of financial accounting records. Management Response See corrective action plan.
Criteria Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition During our audit we noted a lack of required property records to support that compliance with equipment and real property management compliance requirements was being achieved. Cause Management was not aware of the governance compliance requirements specific to the Head Start Cluster, thus did not maintain a proper filing system for property records as required by equipment and real property management compliance requirements. Effect The effect of this condition is that equipment purchased with Head Start Cluster funds could be considered unallowed resulting in a request for the funds to be returned. Recommendation We recommend that a proper filing system that handles both hard copy and electronic supporting documents be implemented. We further recommend that document management software or application be utilized to help maintain supporting documentation of financial accounting records. Management Response See corrective action plan.
Finding Number: 2020-008 Prior Year Finding Number: 2019-007 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program CFDA: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan which is attached as Appendix B.
Finding Number: 2020-008 Prior Year Finding Number: 2019-007 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of Transportation Airport Improvement Program CFDA: 20.106 Award #: Various Award Year: Various Criteria – Per 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 FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, the Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The internal controls established for the records maintenance and physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Effect or Potential Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – None. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan which is attached as Appendix B.
Federal Agency: U.S. Department of Interior CFDA Program: 15.875 Economic, Social, and Political Development of the Territories Award Number: D18AP00138 and D20AP00049 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), 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. Lastly, 2 CFR 200.313(d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For 11 (or 100%) of 11 capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does not include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance. Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance are not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. 3. CHCC should ensure that the results of the periodic maintenance procedures include all information, including unique identifiers for capital assets, necessary to properly and timely trace capital assets between the capital assets listing and the maintenance results listing. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.
Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Administration Award Number: 1H79SM081982-01 and 5H79SM081982-02 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), 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. Lastly, 2 CFR 200.313 (d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For five (or 100%) of five capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does not include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance. 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance. Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance is not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results. Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. 3. CHCC should ensure that the results of the periodic maintenance procedures include all information, including unique identifiers for capital assets, necessary to properly and timely trace capital assets between the capital assets listing and the maintenance results listing. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.
Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Award Number: 1NU50CK0004990100 and 6NU50CK0004990104 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), 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. Lastly, 2 CFR 200.313(d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For eight (or 100%) of eight capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance. 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance are not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results. Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." ELKHART AND ST. JOSEPH COUNTIES HEAD START CONSORTIUM SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2020 20. Section III – Federal Award Findings and Questioned Costs (Continued) Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY20 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." ELKHART AND ST. JOSEPH COUNTIES HEAD START CONSORTIUM SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2020 20. Section III – Federal Award Findings and Questioned Costs (Continued) Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY20 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Head Start Cluster – Equipment Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Compliance Requirement: Equipment Audit Finding: Material Weakness, Modified Opinion, Noncompliance Criteria: 45 CFR 75.308(c)(1) states in part: "For non-construction Federal awards, recipients must request prior approval from HHS awarding agencies for one or more of the following program or budget-related reasons: . . . (xi) The recipient wishes to dispose of, replace, or encumber title to real property, equipment, or intangible property that are acquired or improved with a Federal award. . . ." 45 CFR 75.323 states: "Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The HHS awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." ELKHART AND ST. JOSEPH COUNTIES HEAD START CONSORTIUM SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2020 20. Section III – Federal Award Findings and Questioned Costs (Continued) Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements. Effect: The failure to establish an effective internal control system allowed noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: During testing, we noted the Unit purchased eight buses in FY20 that each exceeded the $5,000 federal equipment threshold. However, the Unit did not perform any of the required federal compliance steps for equipment in FY20 (getting approval before making the purchase, adding the buses to the capital asset listing, and performing an inventory of the buses). The total cost of the buses, excluding interest costs on the loan, was approximately $649,000. The total annual payments, including interest from the loans, on the buses is approximately $177,000. The Unit initially believed the bus purchases were rental agreements which would not fall under federal compliance requirement. However, the purchases were loan agreements to purchases the buses. The Unit will own the buses after the final payment is made. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the Unit perform the required steps to maintain compliance with the federal equipment compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.