Finding Text
Finding No. 2023-017 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000513 Area: Equipment and Real Property Management Questioned Costs: Unable to determine Criteria: In accordance with 2 CFR Section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or another identification number, the source of funding for the property (including the Federal award identification number), 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. Condition: 1. FSMNG was unable to provide a comprehensive listing of its capital assets related to the federal program, nor could it supply the schedule of disposals for the year. As a result, no questioned costs are identified, as we are not able to quantify the extent of noncompliance. 2. FSMNG did not perform the required property and equipment inventory count for the past two fiscal years. Cause: FSMNG lacks controls to comply with property and equipment requirements and adherence to established policies and procedures regarding physical inventory counts of property and equipment and failure to reconcile property records. Effect: The FSM National Government is in noncompliance with applicable equipment and real property management requirements. No questioned cost because we are unable to quantify the extent of noncompliance related to the program’s capital assets. Recommendation: 1) Management should adhere to the requirement of 2 CFR Section 200.313(d)(1) to comply with the requirements for Equipment and Real Property Management; and 2) Management should establish and implement effective monitoring controls to ensure that property records are accurately maintained. Additionally, it is essential to verify 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: In our recent meeting, we clarified that the schedule for additions provided specifically for ALN 93.323 was not reconciled with the total general ledger expenditure, we did not mention the entire Fixed Asset Register (FAR). Additionally, it is important to note that the required physical inventory of equipment was not performed, which is why reconciled schedules are lacking. To address these issues, management should establish and implement effective monitoring controls to ensure that property records are accurately maintained. This will help enhance compliance and improve asset management practices moving forward. We appreciate FSM NG's commitment to strengthening internal controls and look forward to continued collaboration to resolve these matters.