Finding 370433 (2023-001)

2023-001: Internal Controls over Compliance and Compliance with Equipment and Real Property Management: Criteria or Specific Requirement – 2 CFR Part 200.313(d) outlines procedures for managing equipment (including replacement equipment whether acquired in whole or in part under a Federal award until disposition takes place). At a minimum, equipment and real property must 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 Federal Award Identification Number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award number 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. Condition – During our testing of equipment and property inventory compliance, we identified six pieces of equipment totaling approximately $188,505 was not performed within the past two-years. Cause – Certain Foundation personnel did not comply with documented controls related to the physical inventory and reconciliation of property records for equipment to prevent noncompliance and the potential loss of equipment procured with Federal Funds. Effect or Potential Effect – The Foundation did not comply with 2 CFR Part 200.313. Failure to properly conduct an inventory of equipment can result in noncompliance and potential loss of equipment procured with the Federal funds. Questioned Costs – Not applicable as there were no questioned costs related to noncompliance. Context – This matter was identified through our testing of equipment records and disclosure by the Foundation of certain inventory items not being counted timely. BDO noted the equipment inventory population consists of approximately 2,800 items totaling approximately $85.5 million. Repeat Finding - This is a repeat finding from prior year. This was reported as finding 2022-001 in the 2022 report. Recommendation – We recommend that the Foundation comply with procedures to ensure compliance with 2 CFR Part 200.313 in relation to equipment and real property inventory procedures and maintenance of property records. Policies and procedures are already in place; therefore, personnel must implement those documented policies and procedures. Views of Responsible Officials and Planned Corrective Actions – Management agrees with this finding. Management is continuing several procedures to ensure equipment inventories are performed timely, incuding the review of inventory deficiency reports.