Finding Text
Federal Agency: United States Department of Health and Human Services ALN: 93.889 National Bioterrorism Hospital Preparedness Program Pass-Through Grantor: Illinois Department of Public Health and Illinois Health and Hospital Association Pass-Through Award Number: 47280007L; 47280009L; 57280007M; 57280009M; and 197137 Award Period: 7/1/2023 to 6/30/2025 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Section 200.313(d)(1) and (2) states, “Regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) 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 the 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. (2) 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.” Condition: The Organization did not retain property records documenting the appropriate criteria required by Section 200.313(d)(1) and (2), and did not conduct a physical inventory of property. Cause: The Organization did not have sufficiently designed internal controls to ensure that property records are retained in accordance with Section 200.313(d)(1) and (2), and to ensure that physical inventory procedures are conducted over property at least once every two years. Effect or potential effect: Federal equipment may not be maintained or disposed of in accordance with federal regulations. Questioned costs: None. Context: We tested a sample of 5 items from the equipment listing related to the federal program for the period January 1, 2024 through December 31, 2024. For all five items, there was no evidence that a physical inventory was performed in the last two years. For one item selected for testing the serial number listed on the listing did not match the serial number of the item selected. The total National Bioterrorism Hospital Preparedness Program expenditures reported on the Schedule are $952,593 for the year ended December 31, 2024. The net book value of all assets related to this federal program were $205,978. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: The Organization should implement more robust internal controls to ensure that accurate property records are maintained and physical inventory procedures over property are conducted at least once every two years. Views of responsible officials: Management agrees with the finding. Program and Fixed Asset Accounting teams will collaborate to ensure adherence to the established asset tracking and inventory management procedures. The joint effort will ensure that the subsidiary ledger is maintained, equipment acquired through federal grants is properly recorded, and physical inventories are conducted within the prescribed timelines.