Finding Text
Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award Nos.: D22AF00327, D23AF00019, D21AF10232, D22AF00017, D22AF00326, D23AF00061, D21AF10013, D19AF00046, D21AF10018, D20AP00054, D19AP00124 Area: Equipment and Real Property Management Questioned Costs: Unable to be determined Criteria: 1. Article VI Section 1(f)(4)(i) of the Fiscal Procedures Agreement (FPA) says “Property records shall be maintained which include: (1) a description of the property, (2) a serial number or other identification number, (3) the source of property, (4) who holds title, (5) the acquisition date and cost of the property, (6) the percentage of the United States funding used in the purchase, (7) the location use and condition of the property, and (8) any ultimate disposition data including the date of disposal and sale price 2. Additionally, in accordance with Article VI Section 1(f)(4)(ii) of the Fiscal Procedures Agreement (FPA) says “A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years”. Condition: 1. FSM National Government was not able to provide a complete listing of its capital assets for the program and the schedule of disposals during the year. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. FSM National Government did not perform the required property and equipment inventory count for the past two fiscal years. Cause: 1) The FSM National Government did not provide sufficient and appropriate audit evidence to assist the auditors during the testing procedures for the equipment and real property management compliance requirement. 2) FSM National Government lacks monitoring procedures to ensure physical inventory counts are conducted at least once every two fiscal years Effect: The FSMNG is in noncompliance with applicable equipment and real property management requirements. Questioned costs are unknown as the FSMNG could not provide the program’s capital assets listing. See below for the cumulative dollar amount of property equipment acquired with program grant funds over the past five years. Identification as a Repeat Finding: Finding No. 2022-012 Recommendation: 1) Management should adhere to the requirement of Article VI Section 1(f)(4)(i) to comply with the requirements for Equipment and Real Property Management; and 2) Management should establish and implement effective monitoring controls to ensure property records are accurately maintained. 3) Management should establish and implement effective monitoring controls to ensure that the required physical inventory of equipment has been conducted. Views of Responsible Officials: Management disagrees with the finding. Refer to FSM NG’s Views of Responsible Officials for their detailed response. Auditor Response: Noncompliance was due to incomplete listing of its capital assets and failure to conduct required physical inventory count as required by the FPA.