Finding Text
2023 002 Physical Inventory Observation Federal Program Information: Funding agency: U.S. Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Award year and number: 10CH011884 03 12/01/2022 11/30/2023 10HE00046301C5 04/01/2021 03/31/2023 10HE00046301C6 04/01/2021 03/31/2023 Criteria or Specific Requirement: Under 2 CFR section 200.313(4)(2), a physical inventory of property must be taken at least once every two years. The results should be reconciled with the general ledger. Condition: Mid Columbia Children's Council, Inc. did not maintain documentation of the physical inventory it performed during the fiscal year ended November 30, 2022. Questioned Costs: None Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, Mid Columbia Children's Council, Inc. may be overstating or understating capital assets in its financial statements. Cause: Mid Columbia Children's Council, Inc. has experienced turnover in upper management, records from previous leadership could not be located. Auditor's Recommendation: Mid Columbia Children's Council, Inc. should maintain its documentation of an entity wide physical inventory of its capital assets performed every two years. Once completed, the listing should be reconciled to the general ledger control totals and the control totals adjusted to the balances supported by the physical inventory results. Mid Columbia Children's Council, Inc. should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis. View of Responsible Officials: Management agrees with the finding and has developed and begun implementation of a corrective action plan.