Finding Text
U.S. Department of Housing and Urban Development - Community Development Block Grants/ Entitlement Grants Cluster (ALN #14.218)
Condition: During the audit, it was noted that the City was not conducting an inventory of equipment and real property purchased with CDBG grants funds.
Criteria: The Code of Federal Regulations [2 CFR section 200.313(d)(1) and 200.313(d)(2)] requires equipment and real property records must be maintained that include a description of the property or equipment, a serial or identification number (if applicable), the source of funding, acquisition date, cost of the property or equipment, location, and condition. In addition, the Code of Federal Regulations requires that a physical inventory of equipment and real property must be taken, and the results reconciled with the records at least once every two years.
Cause: The City does not have controls in place to ensure that an inventory of equipment and real property purchased with grant funds is being conducted and maintained.
Effect: The City is not in compliance with the Equipment and Real Property federal requirements. Failure to comply with grant award requirements could jeopardize future funding.
Questioned Costs: This finding does not result in questioned costs.
Recommendations: We recommend that the City implement procedures to ensure that all federal equipment and real property requirements are followed, including maintaining an accurate and complete listing of equipment and real property purchased with grant funds and conducting an inventory on those items at least every two years.
Views of Responsible Officials: Expenditures of CDBG grant funding for capital outlays on equipment and real property are readily identifiable within the City’s fixed assets module of the accounting system, including subsequent retirements of any such capital assets. The Department acknowledges related physical inventory observations to identify these assets have not been consistently performed. The Department will work to formalize such inventory procedures working off of an available assets listing generated from within the fixed assets system. The City will look to complete such process as soon as is feasibly possible.