Finding Text
BETH ISRAEL LAHEY HEALTH, INC. AND AFFILIATES
Schedule of Findings and Questioned Costs Year ended September 30, 2023
(3) Findings and Questioned Costs Relating to Federal Awards Finding 2023-001
Federal Agency: United States Department of Health and Human Services
Program Name: Research and Development Cluster
Assistance Listing Number: Various
Criteria:
According to 2 CFR 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, 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 2 CFR 200.313/(d)(3) and (4), a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of property and adequate maintenance procedures must be developed to keep the property in good condition.
Additionally, 2 CFR section 200.313(d)(2) requires a physical inventory of Federally acquired property must be taken and the results reconciled with the property records at least once every two years.
In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that accurate property records are maintained and equipment items are property tagged.
Condition:
Beth Israel Deaconess Medical Center (BIDMC), one of Beth Israel Lahey Health, Inc.’s affiliates, did not consistently follow its property management policies and procedures related to maintaining accurate property management records for equipment purchased with Federal R&D Cluster program awards.
BIDMC conducts research at multiple locations throughout its campus where equipment purchased with Federal awards is utilized and maintained. As of September 30, 2023, BIDMC maintained Federally acquired property of approximately $65.5 million. BIDMC identifies all equipment in its property management records with individually assigned asset numbers and each individual asset record includes the specific location of the asset, the Federal award general ledger account number which funded the purchase of the asset, and other required information. An asset tag with the assigned asset number is affixed to each asset in accordance with BIDMC policy. BIDMC is required to safeguard equipment purchased with Federal awards, maintain current property records, and to perform a physical inventory of equipment purchased with Federal awards on a biennial basis.
During our physical inspection of 40 pieces of equipment (with a cost basis of $4,562,717) purchased with Federal funds, we identified 7 items (with cost basis totaling $116,831) selected for physical observation which had not been tagged. Overall, BIDMC’s inventory listing included 34 pieces of equipment (with a cost
basis of $1,500,686) acquired with Federal funds that were not tagged. Additionally, we noted that BIDMC did not conduct a physical inventory within the biennial period required.
We deemed this to be a material weakness in internal controls.
Cause:
In discussing these conditions with BILH management, they stated the implementation of a new asset tagging system resulted in delayed tagging of purchased equipment as well as the physical inventory of Federally acquired property.
Possible Asserted Effect:
Failure to maintain accurate property records may prohibit BIDMC from properly safeguarding and maintaining equipment.
Questioned Costs:
None.
Statistical Sampling:
The sample was not intended to be, and was not, a statistically valid sample.
Identification of Whether the Audit Finding was a Repeat Finding:
This is not a repeat finding.
Recommendation:
We recommend BIDMC review its procedures for updating property records to ensure they accurately reflect equipment information. Additionally, management should arrange for a physical inspection and reconciliation of Federally acquired property to books and records.
Views of Responsible Officials:
A review of the Beth Israel Deaconess Medical Center’s (BIDMC) property records maintenance revealed incomplete biennial physical inventory and incomplete tagging of new equipment purchased on federal awards. Management agrees with the recommendation and will update the asset tagging system to support completing the biennial inventory and resume tagging new equipment according to established policy.