Finding No. 2024-001 - Equipment and Real Property Management
Federal Program
Research and Development Cluster
Name of Federal Agency
U.S. Department of Health and Human Services
Category
Other matters
Compliance requirement
F. Equipment and Real Property Management
Criteria
2 CFR section 200.313(d), Equipment Management Requirements, states that: 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.
(5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.
Condition
As a result of our prior year audit procedures, we noted that the last physical inventory of property was taken on July 13, 2021, accordingly, the Foundation should have completed a physical inventory on or before July 13, 2023. As of June 30, 2024, the physical inventory was still in process and was expected to be completed before June 30, 2025.
Cause
The property inventory was originally scheduled for the fiscal year ended June 30, 2023, however, due to medical complications of the employee in-charge of fixed assets, the inventory was postponed until 2024. Because of the timing of when the inventory was commenced and the high volume of the assets being counted, the inventory was not completed as of June 30, 2024.
Effect
Conducting physical inventory ensures compliance with regulations and helps maintain accountability for the use of federal expenditures, prevents fraud and abuse, and helps identify surplus or underutilized equipment, leading to more efficient allocation of resources.
Questioned Cost
None.
Context
Since the last property inventory was taken on July 13, 2021, the next property inventory should have been performed on or before July 13, 2023. As of June 30, 2024, the physical inventory was still in process.
Identification of a repeat finding
This is a repeat finding from the immediate previous audit. Finding 2023-001.
Recommendation
The Foundation should complete the physical inventory before June 30, 2025. In addition, related policies and procedures should be updated as a result of the current inventory to improve the efficiency of the count and ensure the timely completion of physical inventories in the future. Also, there should be reminders set to the corresponding personnel to perform the property inventories, at least, every two years, and with sufficient time to allow for the completion of the inventories within the required timeframe.
Views of responsible officials and planned corrective actions
The Foundation’s management agrees with this finding. Please refer to the corrective action plan on pages 33-34.