Finding Text
FINDING 2023-002
Information on the federal program:
Subject: Head Start Cluster – Equipment
Federal Agency: Department of Health and Human Services
Federal Program: Head Start Cluster
Assistance Listing Number: 93.600
Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285, 05HE000044
Compliance Requirement: Equipment
Audit Finding: Significant Deficiency
Criteria 2 CFR 200.313(d) states in part:
"Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, 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 FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award 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. . . ."
Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the equipment compliance requirements.
Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the equipment requirements.
Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs.
Questioned Costs: None.
Context: For the eight buses sampled for equipment testing, the buses were not added to the capital assets listing. Additionally, no inventory was performed during the audit period.
Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2022-003.
Recommendation: We recommend that the Unit add the bus purchases to their capital assets listing and perform an inventory at least every two years.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.