Finding Text
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.313(d) which provides that procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. Furthermore, the Academy’s Fixed Asset Policy requires a “periodic” physical inventory of Fixed Assets. Due to the lack of proper controls over equipment and real property, the Academy did not perform a physical inventory of fixed assets within the prior two fiscal years. Additionally, the documented frequency in which a physical inventory is to be performed within the Academy’s Fixed Asset Policy is not in agreement with federal requirements. This noncompliance also resulted in a qualified opinion over the AL# 84.425 COVID-19 Education Stabilization Fund program. Failure to perform required physical inventories may result in the loss, misappropriation, theft, or diversion of assets and noncompliance with federal award requirements and Academy policy. The Academy should perform the required physical inventory of property at least once every two years. The Academy should also revise its Fixed Asset Policy to ensure agreement with federal requirements.