Finding 1182164 (2025-002)

2 CFR § 3474.1 gives regulatory effect to the Office of Budget and Management Guidance in 2 CFR §200.313(d) for the Department of Education, which states, in part, that a control system must be in place to ensure safeguards to prevent loss, damage, or theft of the equipment. It also requires that the recipient or subrecipient maintain property records that include a description of the asset, a serial number or other source of identification (including the FAIN), the source of funding for the property and other data to identify the equipment. Finally, it requires recipients or subrecipients to perform a physical inventory of property purchased with federal funds and reconcile the inventory results to the recipient or subrecipient’s property records at least once every two years. Due to insufficient knowledge of and controls in place over the federal requirements related to equipment and property management we noted the following issues: • The District could not provide evidence that a physical inventory over property purchased with Elementary and Secondary School Emergency Relief (ESSER) Fund (AL #84.425D) and American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) Funds (AL #84.425U) had been taken and reconciled with property records in the required timeframe. • 30 items (out of 60) selected for physical observation during the prior-year audit were still not properly tagged and still could not be reconciled with the District’s property listing provided by management. • 28 property items selected for testing during the prior year still could not be located for physical observation. • Asset records for all ten (100%) assets purchased with ARP ESSER funds during the audit period were not properly updated with the required information; and • District could not determine if there was any equipment purchased with ARP ESSER or ESSER I fund, disposed of during the audit period. Lack of controls over equipment management and failure to complete the required inventory could lead to misappropriation of District assets and potential questioned costs and non-compliance with federal requirements.