Finding No. 2021-004 - Equipment and Real Property Management Identification of the federal program: Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Award Number: D19AP00132, D19AP00133, D20AP00115 Criteria or specific requirement (including statutory, regulatory or other citation): In accordance with 2 CFR Section 200.313(d)(1), property records must be maintained that include a description of the property, a serial number or another identification number, the source of funding for the property (including the Federal award identification number), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. Additionally, as stated in CHCC Grants Management Policies and Administration Procedures section Procurement and Property Management Standards 13(a), property records must be maintained which include a description of the property, a serial number or other identification number, the source of property, the name of the titleholder, the acquisition date, the cost of the property, the percentage of federal or state participation in the cost of the property, and the disposition data including the date of disposal and sale price. Approval for disposal of property obtained with grant funds must be obtained by Medical Supply Office (MSO) prior to actual disposal. In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: 1. CHCC’s current policy and procedures for property records maintenance did not include all the requirement information as prescribed by 2 CFR 200.313(d)(1). 2. CHCC’s fixed assets registry (FAR) did not include all the required information prescribed by 2 CFR 200.313(d)(1). 3. CHCC performed a physical inventory inspection during fiscal year 2021. However, the physical inventory documentation did not contain evidence that the inventory results and related reconciliation were reviewed and approved by authorized personnel. Cause: 1. CHCC did not appropriately design its property records maintenance procedures to ensure compliance with all the requirements of 2 CFR 200.313(d)(1). 2. CHCC lacks monitoring controls to ensure that the information required by 2 CFR 200.313(d)(1) is included in the FAR for all federally funded property. 3. CHCC has not implemented documented review and approval procedures over physical inventory results and the related reconciliation to property records. Effect or potential effect CHCC is in noncompliance with applicable equipment and real property management requirements. Questioned costs: $0; Undetermined. Conditions 1 and 3 relate to ineffective internal controls over compliance resulting in a questioned costs of $0. Condition 2 is not determined. The noncompliance relates to incomplete equipment records that did not contain all information required under the equipment management requirements. While the net book value of the affected equipment is provided in the context section, the auditors were unable to reasonably determine or estimate the portion of Federal expenditures affected by the missing recordkeeping elements. Audit procedures did not identify unsupported, unallowable, or improperly used equipment associated with the items tested. Context: 1. The currently established policy and procedures for property record maintenance lacks the requirement to include the location, use and condition. 2. For four (or 100%) of four federal capital asset additions selected for testing, CHCC’s FAR did not include the assets’ location, use and condition, as required by 2 CFR 200.313.(d)(1). 3. The documentation supporting the inventory count inspection during FY 2021 did not contain evidence of review or approval by the program managers or the procurement director. Identification as a repeat finding, if applicable: Finding No. 2020-004. Recommendation: 1. CHCC should revise their property records management policy to include all information required by 2 CFR 200.313(d)(1) particularly the location, condition and use. 2. CHCC should establish monitoring controls to verify that required property information is complete and accurate, including when assets are acquired, inspected or disposed of. 3. CHCC should establish and document its review and approval procedures over the result of the annual physical inventory inspection, including related reconciliations, to ensure that differences identified are resolved and reconciled to the property records of each program. Views of Responsible Officials: CHCC concurs with the findings. CHCC updated its Capital Assets policy on June 10, 2026, to comply with the requirements of 2 CFR 200.313. Pursuant to the revised policy, CHCC will update the fixed assets listing for all the required components and proper documentation reconciliation results. Identification of the federal program: