Finding Text
Program Information: See the Corrective Action Plan for chart/table Criteria or specific requirement: Per 2 CFR § 200.303 Internal controls, 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). According to federal regulations, property records must be maintained to include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the program was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. Further, a physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years. Condition/Context: A physical inventory of equipment was not performed during fiscal year 2022 or in the prior fiscal year. There are no controls in place to ensure the inventory records are agreed to the capital assets ledger, and the accuracy and completeness of property records supporting federally funded assets could not be verified. [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Cause: Lack of sufficient internal controls over physical inventory and property management may have contributed to this finding, in addition to limited staffing and competing priorities. Effect: Without a physical inventory of capital assets that agree to the general ledger, it is possible that assets could be misappropriated without detection or disposed of improperly. Questioned Costs: Due to lack of sufficient documentation, we were unable to determine questioned costs. Repeat Finding: Yes – 2021-007. Recommendation: We recommend that the entity establish and implement procedures to perform a physical inventory of all equipment at least once every two years, in accordance with 2 CFR 200.313(d)(2). The results of the inventory should be reconciled to the property records and capital assets ledger. Additionally, management should implement controls to ensure ongoing accuracy and completeness of equipment records, particularly for federally funded assets. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.