Finding Text
Finding Number: Finding 2025-006 Program Name: Head Start and Early Head Start Pass Through Agency: N/A Type of Finding: Other Matter, compliance a. Criteria or Specific Requirement: Physical Inventory Observation: Under 2 CFR 200 200.313(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. b. Condition: The Organization has not performed a physical inventory in the last two years. c. Context: Recipients of Federal grants are required to perform physical inventory at least once every two years. d. Questioned Costs: None identified. e. Cause: The Organization has experienced turnover and, as a result, did not perform the physical inventory. f. Effect: The capital asset listing and corresponding financial statement balances may be misstated or incomplete. Without taking a physical inventory, the Organization may be overstating or understating capital assets in its financial statements. g. Repeat: Yes. h. Recommendation: The Organization should maintain its documentation of an entitywide 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. The Organization should also implement procedures to retain adequate supporting documentation and ensure the proper recording of additions, deletions, and depreciation on a timely basis.