Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Elementary and Secondary School Relief Fund
Assistance Listing Number: 84.425U
Federal Award Identification Number and Year: S425U210044 Federal Award Date 12/6/2021 and 3/13/2020
Pass-Through Agency: Wisconsin Department of Public Instruction
Pass-Through Number(s): 2022-105726-DPI-ESSERFIII-165
Award Period: July 1, 2023 – June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter
Criteria or Specific Requirement: 2 CFR 200.313(d)(2) states "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." 2 CFR 200.313(d)(1) states " Property records must 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, the cost of the property, the percentage of the 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. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property."
Condition: District used ESSER funds in 2022-23 as one funding source for a van and a playground and building project. In 2023-24, the district purchased a second van with ESSER funds. The District has not completed a physical inventory of its capital assets as required by Uniform Guidance. The District did not include all of the required information in the property records maintained in its capital asset software.
Questioned Costs: None.
Context: While performing audit procedures, it was noted that the District did not have policies in place to ensure compliance with retaining information about capital asset purchases with federal funds for all assets in our sample. The District did not have adequate procedures in place to ensure that a physical inventory was conducted within the required timeframe. There was no review of the capital asset records by someone other than the person responsible for maintaining the list.
Cause: The District has not historically used federal funds to purchase equipment and real property and was unaware of the requirements.
Effect: Failure to conduct a physical inventory may result in inaccurate equipment records, which can lead to mismanagement of assets and potential loss or misuse of equipment. Equipment or real property purchased with federal funds may not have properly maintained property records and upon disposition of the asset the District may have failed to provide information and funds back to the federal government.
Repeat Finding: No.
Recommendation: We recommend that the District establish and implement procedures to ensure that a physical inventory of equipment is conducted at least once every two years. This should include assigning responsibility for the inventory process, setting a schedule for inventory counts, and ensuring that the results are reconciled with the equipment records. We also recommend the District review its capital asset tracking processes and implement internal controls to help ensure that all required documentation is entered into the capital asset software when federal funding is involved and there is adequate segregation of duties in regards to capital asset reporting.
Views of Responsible Officials: There is no disagreement with the audit finding. The District will either do a self-inventory or hire a firm to do the inventory for us.