Finding Text
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, Plant 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 and context: The Organization does not have a process in place to identify equipment and real property that is purchased with federal funds.
Effect: The auditor noted instances of noncompliance. Noncompliance results in the federal interest in the assets acquired with federal grants not being properly tracked.
Questioned costs: None identified.
Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award.
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: An updated Purchasing Policy was approved by the Organization that covers this finding. In addition, a PO Process was established where pre-approvals are needed and a line item for grants is available to distinguish general operating expenditures from federally funded expenditures.