Finding 4212 (2023-003)

Criteria: Federal regulations, specifically outlined in the Uniform Guidance (2 CFR 200), require grantees and subgrantees to maintain accurate and complete records that adequately identify the use of federal funds. This includes maintaining separate records for equipment purchased with federal funds to facilitate proper tracking, reporting, and compliance monitoring. Condition: The District lacks a systematic approach to differentiate equipment acquired through federal funding sources from other assets. The absence of a dedicated tracking system and failure to maintain distinct records for federally funded equipment makes it challenging to identify, monitor, and report on the utilization, maintenance, and disposal of equipment purchased with federal dollars. Cause: The absence of a comprehensive tracking system and designated procedures for segregating federally funded equipment resulted from a lack of awareness of federal requirements and internal control weaknesses within the organization's asset management practices. Effect: The inability to track equipment purchased with federal funds separately compromises the District's ability to meet federal reporting requirements and demonstrate proper stewardship of public resources. Additionally, it increases the risk of misallocation, misuse, or loss of valuable assets, leading to potential financial losses and non-compliance with federal regulations. Questioned Costs: $-0- Auditors’ Recommendation: We recommend that the District establishes an equipment tracking system that clearly distinguishes assets acquired through federal funding sources. This system should include unique identifiers for federally funded equipment, detailed records of acquisition, usage, maintenance, and disposal, and regular reconciliations to ensure accuracy. Additionally, the District should provide training to staff responsible for asset management to enhance awareness of federal regulations and internal policies related to equipment tracking. View of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.