Finding Text
2023-009 Improve Controls and Compliance with Equipment and Real Property Management Federal Program Information Federal Agency: U.S. Department of Housing and Urban Development Award Name(s): CDBG Entitlement Grants Cluster Assistance Listing Number(s): 14.218 Award Year: 2023 Compliance Requirement: Equipment and Real Property Management Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.313), recipients of federal funds must maintain property records for equipment acquired with federal funds and conduct a physical inventory of such equipment at least once every two years. Property records should include a description, serial number or other identification, the source of funding, acquisition date and cost, and the location, use, and condition of equipment. Evidence of inventory counts and reconciliations must be retained. Condition and Context The City was unable to provide a listing of equipment purchased with federal funds and could not provide documentation demonstrating that a physical inventory count of federally funded equipment had been performed. In addition, the City could not provide a complete listing of real property either purchased with federal funds or managed under a federal program to assist with the primary objectives of providing housing to low-income residents. Cause The City did not have sufficient controls or procedures in place to track federally funded equipment or to conduct and document required physical inventory counts. Effect or Potential Effect The absence of property records and failure to perform or document physical inventory counts increases the risk that federally funded equipment may be lost, stolen, misused, or otherwise not accounted for properly. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This is a repeat of prior year findings 2022-003 and 2022-006. Recommendation The City should establish and maintain comprehensive property records for all equipment acquired with federal funds. The City should also implement procedures to perform and document physical inventory counts of federally funded equipment at least once every two years, and ensure that records of these inventories are retained. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.