Finding Text
Criteria: 2 CFR 200.313(d)(2) requires the non-Federal entity take a physical inventory of property and reconcile the results with the property records at least once every two years. Condition: The physical inventory was not conducted as required. Context: In October 2021, the University conducted a physical inventory of all of its fixed assets which includes property acquired with federal funds. To facilitate the inventory, the University distributed a memo to all department heads detailing the procedures needed to conduct a physical inventory and instructed them to perform a physical inventory in their respective departments by December 1, 2021. During our audit, it was noted that the physical inventory was not completed by all departments. Based on the information provided by management there were 16 property items that were subject to inventory; however, because the inventory documentation provided did not cover all departments, only 1 property item was identified through the physical inventory. Cause: Although the University has procedures in place over the physical inventory of property, there was a lack of diligence in complying with the procedures. Effect: Failure to perform physical inventory of property and reconcile the results with the property records at least once every two years results in noncompliance with the equipment and real property management requirement. Questioned Costs: None Identification of a repeat finding: N/A Recommendations: We recommend the University follow their procedures for the physical inventory of equipment and ensure all departments timely complete the physical inventory. Views of responsible officials: The HPU Fixed Asset Accountant, Federal Grant Project Investigator and Office of Sponsored Projects will work collaboratively to ensure that the physical inventory of all fixed assets which were acquired using federal funds are conducted and completed periodically. This physical inventory monitoring will be done at least, every two years. The team will work on getting all departments covered in the periodic inventory to confirm that the fixed asset listing is complete, updated and maintained.