Finding Text
Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00013, D24AF00341 Area: Equipment and Real Property Management Questioned Costs: $32,214 Criteria: In accordance with 2 CFR 200.303(a), a subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Article VI Section I (f)(iv)(c) of the Fiscal Procedures Agreement (FPA) states that a control system shall be developed to ensure adequate safeguards against property loss, damage, or theft. Any loss, damage, or theft shall be investigated. Additionally, according to article VI Section I (f)(iv)(d) of the FPA states that adequate maintenance procedures shall be developed to keep the property in good condition. Condition: For six (or 14%) out of forty-two equipment selected for testing with an aggregate net book value totaling $589,938 and a total net book value population of $3,703,666, CSG did not properly safeguard and maintain the federal capital assets to ensure that the property exists and is in proper working condition. Based on the physical inspection, the following capital assets were either not located or found to be in a broken state, with no evidence indicating that they are currently under repair. Cause: CSG does not have established policies or procedures to ensure sufficient safeguards against loss, damage, or theft of the property, as well as adequate maintenance procedures to keep property in good condition. Effect or Potential Effect: CSG is in noncompliance with applicable equipment and real property management requirements and a total questioned costs $32,214 result. The amount of questioned cost is based on the net book value of the asset. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. CSG should establish a written policy along with comprehensive procedures to ensure effective safeguards against loss, damage, or theft of property, as well as establish robust maintenance protocols to preserve the property in good condition. 2. CSG should strictly enforce their actual safeguarding and maintenance procedures to ensure that federal capital expenditures are kept safe and in good working condition. Views of Responsible Officials The State agrees with the finding. Corrective Action is described in the Corrective Action Plan.