Finding Text
Finding 2025-003 – F. Equipment and Real Property Management Identification of the federal program: Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.493, Congressional Directives Award Period: July 1, 2024 through June 30, 2025 Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: “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).” Condition: UC Health did not appropriately design and execute internal controls to establish and maintain property records that included all requirements for equipment purchased under the federal grant. Cause: The controls designed by UC Health over the federal grant did not consider the property records required to be maintained for equipment purchased with federal funds. Nine specific criteria must be included in the property records of federal funded equipment (as well as a tenth that is only applicable after disposal of the equipment, which was not applicable). UC Health’s records included six of the nine applicable criteria, but did not include the source funding (including the federal award identification number), percentage of federal participation in the project costs, or use and condition of the property. Effect or potential effect: The absence of controls over the equipment property record requirements resulted in management not establishing or maintaining records that satisfied all of the federal requirements. Questioned costs: None. Context: Property records satisfying all of the federal requirements could not be provided when requested for testing. Management concludes that records containing all the necessary data fields had not been established. Expenditures under federal funded project that pertained to equipment purchases totaled $911,276, with only 51.1% of that balance attributed to federal funding. These expenditures included the purchase of medical equipment, non-medical equipment, and information technology hardware. Identification as a repeat finding, if applicable: Not applicable. Recommendation: Management should establish internal control processes over equipment purchased with federal funds that align with the federal requirements. All federal requirements regarding equipment (including not only property records, but physical inventory, safeguarding, and disposition) should be considered when designing these controls. Views of responsible officials: Management agrees with the finding and will update policies and procedures to ensure that all federal requirements around equipment are considered and satisfied.