Finding Text
Finding No.: 2022-004
Federal Agency: U.S. Department of the Interior
AL Program: 15.875 Economic, Social, and Political Development of the Territories
Federal Award No.: Compact Sector Grants
Questioned Costs: $ Undeterminable
Area: Equipment and Real Property Management
Criteria:
Section 200.313(d) of the Uniform Guidance and Article VI, Section 1(f)(4) of the Fiscal Procedures
Agreement states that procedures for managing equipment, whether acquired in whole or in part
with grant funds, will follow state laws and procedures. The following requirements are applicable:
a. Property records must be maintained that include a description of the property, a serial
number or another identification number, the source of funding for the property (including
the FAIN), the title holder, the acquisition date and cost of the property, the percentage of
Federal agency contribution towards the original purchase, the location, use and condition of
the property, and any disposition data including the date of disposal and sale price of the
property;
b. A physical inventory of the property must be conducted and the results must be reconciled
with the property records at least once every two years;
c. A control system must be in place to ensure safeguards for preventing property loss, damage,
or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or
subrecipient must notify the Federal Agency or pass-through entity of any loss, damage, or
theft of equipment that will have an impact on the program;
d. Regular maintenance procedures must be in place to ensure the property is in proper working
condition; and
e. If the recipient or subrecipient is authorized or required to sell the property, proper sales
procedures must be in place to ensure the highest possible return.
Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should
be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant
factors and circumstances.
Condition:
Capital assets records do not meet the criteria above and are not effectively maintained since updates
to the records occur only once a year. Specifically, we noted the following deficiencies:
An inventory of capital assets has not been performed in the recent past in accordance with the
above criteria; therefore, a reconciliation of capital asset records and physical inventory has not
occurred at least once in the past two years.
Capital assets records are not effectively maintained. It does not appear that RepMar has
implemented an effective control system to adequately safeguard capital assets from loss,
damage or theft, or to reasonably investigate such occurrences.
RepMar has not established policies and procedures governing property maintenance and has
not effectively implemented an entity-wide maintenance plan.
Long-lived assets are not routinely evaluated for possible impairment.
Capital outlays within the Compact Sector Grants Fund for fiscal years 2022, 2021 and 2020 were
as follows:
Fiscal Year 2022 $ 4,592,264
Fiscal Year 2021 $ 5,909,859
Fiscal Year 2020 $ 3,358,375
Cause:
RepMar lacks adequate internal control policies and procedures to satisfy compliance with federal
property rules and regulations and lacks effective procedures governing property maintenance, as
well as periodic assessment of asset impairment conditions and useful lives. Moreover, internal
control policies and procedures requiring periodic and timely performance and independent review
of capital assets reconciliations and related general ledger accounts are not effectively implemented.
Effect:
RepMar is in noncompliance with applicable equipment and real property management
requirements, and possible misstatement of capital assets and related accounts exists. Questioned
costs, if any, which may result from inadequate property records, maintenance procedures, and the
absence of timely reconciliations are not determinable.
Identification as a Repeat Finding:
Finding No. 2021-003
Recommendation:
The Ministry of Finance, Banking and Postal Services (MOFBPS) should perform an inventory of
such inventory in accordance with applicable property rules and regulations, and should develop
adequate maintenance procedures in order to keep property in good condition. Furthermore, RepMar
should implement internal control policies and procedures requiring periodic and timely
performance and independent review of capital assets reconciliation and related general ledger
accounts.
Views of Responsible Officials:
We agree with the finding and provide details in our Corrective Action Plan.