Finding 1104956 (2024-003)

Finding Number: 2024-003 Repeat Finding: Yes, 2023-003 Program Name/Assistance Listing Title: COVID-19 Education Stabilization Fund Assistance Listing Number: 84.425 Federal Agency: U.S. Department of Interior Federal Award Number: A23AV00813 Pass-Through Agency: Bureau of Indian Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Equipment and Real Property Management Criteria Local governments and Indian tribes shall follow 2 CFR 200 for equipment acquired under federal awards received directly from a federal awarding agency. Institutions of higher education, hospitals, and other non-profit organizations shall follow the provisions of Uniform Guidance. The Uniform Guidance requires that equipment be used in the program for which it was acquired or, when appropriate, other federal programs. Equipment records shall be maintained, a physical inventory of equipment shall be taken at least once every two years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained. Condition Documentation was not available to review equipment purchases or inventory listings and procedures. Additionally, the School lacked adequate internal controls over its accounting of capital assets and inventory processes. Cause The School has not been able to devote proper resources and training to ensure capital assets are accurate and up to date. Effect The School’s internal controls over capital assets were not adequate to ensure that a misstatement would be prevented and/or detected. The School was not in compliance with requirements set by the federal government. Context During our review of the School’s capital asset schedules we noted the following: • The capital asset listing does not include identification numbers for individual assets. • Capital asset policies appear outdated and need to be updated; this includes adding policies related to finance purchases and lease recognition thresholds. • Physical inventory procedures are not documented, and it is unable to be determined in inventories are done periodically. • The current year capital asset listing was not reconciled to the previous year’s listing. • All assets obtained during the year over $5,000 were not capitalized. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The School should design and implement effective internal control procedures to ensure the capital assets schedules are prepared in accordance with GAAP and School policy. The School’s personnel should obtain additional training as needed. Views of Responsible Officials See Corrective Action Plan.