Finding Text
Finding # 2025-002 Type: Significant deficiency in internal controls over compliance with equipment and real property management Type: Immaterial noncompliance Assisting Listing Number: 14.251 Federal Agency: Department of Housing and Urban Development Name of Federal Program: Economic Development Initiative Requirement: The Uniform Guidance requires recipients to maintain effective control over and accountability for real property acquired with federal funds. Records should be maintained and include, among other information, a description of the property, source of funding, acquisition date, cost, location, condition, and disposition data. Condition: The Organization did not maintain a formal process to track and monitor equipment purchased with federal funds. Specifically, the Organization had not established a complete equipment inventory listing identifying assets acquired with federal awards. Context: During testing of property purchased with federal funds, the Organization was unable to provide a comprehensive property record demonstrating the tracking and monitoring of federally funded assets. Cause: Management had not implemented formal policies and procedures for maintaining equipment records and monitoring property acquired with federal funds. Effect: Without adequate controls over federally funded equipment, the Organization is at increased misuse, unauthorized disposition, or inaccurate reporting of property purchased with federal funds. Additionally, the Organization may be unable to demonstrate compliance with federal equipment management requirements. Questioned Costs: None Recommendation: Management should develop and implement formal procedures for tracking and monitoring property acquired with federal funds. At a minimum, the Organization should maintain detailed property records containing all information required by the Uniform Guidance, assign responsibility for maintaining the inventory, conduct and document periodic physical inventories, reconcile inventory results to the property records, and maintain documentation supporting the use and disposition of federally funded equipment. Management’s Response: Management agrees with the finding and will implement a formal property management process. The Organization will establish a centralized inventory of all equipment and property purchased with federal funds, perform periodic physical inventories, and implement management review procedures to ensure compliance with Uniform Guidance equipment management requirements. Responsibility for maintaining the inventory and monitoring compliance will be assigned to designated personnel.