Finding Text
Finding No.: 2025-003- Equipment – Material weakness and material non-compliance Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria Institutions with federally acquired research and development equipment must adhere to specific guidelines outlined in 2 CFR 200.313. This regulation mandates that entities conduct bi-annual inventory counts of federally acquired equipment to ensure accurate tracking and accountability. It requires maintaining detailed records of all equipment, including acquisition date, cost, location, and current status, to reflect any changes or discrepancies following each inventory count. Additionally, the regulation specifies procedures for the appropriate disposal of federally acquired equipment that is no longer needed or has reached the end of its useful life. Entities must request disposal instructions from the federal awarding agency and ensure that disposal methods comply with federal regulations, including obtaining necessary approvals and documenting the disposal process. Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must 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 the 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). Conditions Found During our testing over equipment, we identified that the College did not conduct an inventory count in the fiscal year under audit or the preceding fiscal year. During our testing over equipment dispositions, we noted that the College maintains a listing of equipment disposals, this listing did not include the date of disposition. Additionally, management was unable to provide documentation demonstrating that during the disposition of equipment the College requested disposition instructions from the federal awarding agency, when required by the terms and conditions of the award and was unable to provide supporting documentation of the individual disposals. Cause The cause of this condition was that the College did not follow its internal policies to conduct a physical inventory count, which contributed to the inability to track the specific timing of equipment retirements. Furthermore, the College lacked formally written policies and procedures governing the disposal of federally acquired equipment to ensure the disposal process, including obtaining necessary approvals, is documented and executed in compliance with Uniform Guidance. Possible Asserted Effect Improper disposal practices and the failure to perform a physical inventory count compromise the integrity of inventory management. Moreover, the absence of formal policies could result in federal noncompliance. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management perform a thorough physical inventory audit to locate all equipment and update the master equipment listing with accurate details, including current locations and statuses. Additionally, we recommend the institution review and regularly circulate formal policies and procedures for the appropriate disposal of non-functional or obsolete equipment. This should include obtaining necessary approvals and documenting the disposal process as per federal guidelines and federal awarding agency instructions. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.