Finding Text
2024-102 Absence of Physical Inventory of Property (Initially reported 2024)
Assistance Listing Number: 93.211
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Rural Telemedicine Grants
Compliance Requirement: Equipment and Real Property Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: GA142923 (2021) and G2846293 (2022)
Finding Type: Significant Deficiency in Internal Control
Questioned Costs: $0
Condition: The Organization did not perform a physical inventory of property purchased with federal awards that could be reconciled back to the capital assets records. This is a systemic issue that has been included as a management point in prior years.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under the compliance requirements for equipment and real property management, nonfederal entities should maintain proper records for equipment and real property and adequately safeguard and maintain equipment and real property that is purchased with federal awards.
Cause: The Organization has not implemented an annual physical inventory of property.
Effect: The Organization may not be able to adequately track acquisitions and disposals of assets purchased with federal awards.
Recommendation: We recommend that the Organization perform an annual inventory of all physical assets purchased with federal awards.
Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and will implement procedures to ensure a physical inventory of property purchased with federal awards is conducted annually and reconciled to capital asset records. With the recent hiring of a Chief Financial Officer and additional finance staff, the Organization is establishing written procedures that require staff to schedule and perform an annual physical inspection of all federally funded property, compare results to the capital asset ledger, and investigate and resolve any discrepancies. Documentation of the physical inventory and reconciliation will be retained for management review and audit purposes.