Finding Text
Finding No.: 2024-012 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories/ Federal Award No.: Compact of Free Association, As Amended Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: Section 200.313(d) of the Uniform Guidance and Article VIII, Section 1(f)(iv) of the Fiscal Procedures Agreement state that procedures for managing equipment, whether acquired in whole or in part with grant funds, must meet the following requirements: a. Property records shall be maintained which include: (1) a description of the property; (2) a serial number or other identification number; (3) the source of property; (4) who holds title; (5) the acquisition date and cost of the property; (6) the percentage of Grants used in the purchase; (7) the location, use, and condition of the property; and (8) any ultimate disposition data including the date of disposal and sale price; b. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years; c. A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program; d. Adequate maintenance procedures shall be developed to keep the property in good condition; and e. If the property is sold, proper sales procedures shall be established to ensure the highest possible return. Additionally, the carrying amount of long-lived assets and the estimated useful lives of assets should be periodically re-assessed and adjusted, as appropriate, based on actual experience and relevant factors and circumstances. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align 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). Condition: 1. Ministry of Finance, Banking and Postal Services (MOFBPS) lacks adequate internal control policies and procedures over compliance with the applicable federal property rules and regulations. 2. MOFBPS’s does not maintain capital asset records that meet the criteria above. 3. MOFBPS has not conducted a physical inventory of program equipment, whether acquired in whole or in part with program funds. Therefore, as of September 30, 2024, the required biannual physical inventory and reconciliation of program property records was not performed. 4. As capital asset records are not effectively maintained, it does not appear that MOFBPS has implemented an effective means of adequately safeguarding capital assets from loss, damage or theft, or to reasonably investigate such occurrences. 5. MOFBPS has not established policies and procedures governing property maintenance. We are unable to assess the overall cumulative monetary value of these deficiencies. In addition, MOFBPS is unable to provide a list of program equipment. Cause: RepMar lacks adequate entity-wide internal control policies and procedures to satisfy compliance with federal property rules and regulations and lacks effective procedures governing equipment management. Effect or Potential Effect: RepMar is in noncompliance with applicable equipment and real property management requirements. Questioned costs, if any, which may result from inadequate property records, maintenance procedures, and the lack of physical inventory and reconciliation are not determinable. Identification as a Repeat Finding: 2023-014 Recommendation: MOFBPS should implement adequate internal control policies and procedures to facilitate compliance with applicable property rules and regulations. MOFBPS should conduct a physical inventory of program equipment and reconcile the results with property records and should develop adequate maintenance procedures in order to keep equipment in good condition. In addition, MOFBPS should consider coordinating with other RepMar ministries and agencies to offer training on property management requirements to all personnel responsible for capital assets. Views of Responsible Officials: The MOF recruited a dedicated asset management officer and began a government-wide asset inventory in April 2026. Upon completion, the FMIS asset module will be fully implemented in FY2027 to improve the classification, recording, reporting, and monitoring of capital assets. The MOF also continues to coordinate with Ministries and Agencies to update and reconcile asset records. Repeated finding: same response on Finding Nos. 2024-007, 2024-019, and 2024-25