Finding Text
Finding 2022-006. Equipment Management. (ALN 84.010 Title I grants to local educational agencies; ALN 84.424 Student support and academic enrichment grants, and ALN 84.425U ARP ESSER III) CRITERIA: 2 CFR 200.313(d)(1) requires for federal grants that 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, the acquisition date, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Since the State of Mississippi has more stringent criteria for tracking equipment inventory, the district must follow the following guidelines for equipment purchased with federal funds. Code Section 37-17-6(18) requires that the State Board of Education, acting through the Commission on School Accreditation, shall require each school district to comply with standards established by the State Department of Audit for the verification of fixed assets and the auditing of fixed assets records as a minimum requirement for accreditation. The State Department of Audit has issued an asset management manual to be used as a standard for verification of fixed assets. The school board has policies and procedures outlining the control and verification of fixed assets within the school district. As part of the asset management manual and local board policy, the district is charged with tracking assets meeting certain thresholds and performing physical verification of those assets at least annually. CONDITION: During our testing, we noted various pieces of equipment purchased with grant dollars totaling $92,555.68 that had not been added to the district?s subsidiary equipment records at the time of audit fieldwork. None of the purchased equipment met the threshold for depreciation; however, all the equipment met the threshold and criteria for tagging and inclusion in the subsidiary equipment records. These purchases were spread over three different federal grants as follows: ALN 84.010 Title I grants to local education agencies - $14,491.39 ALN 84.424 Student support and academic enrichments grants - $40,872.29 ALN 84.425U ARP ESSER III - $37,192.00 The school district stated that even though the equipment had not been added to the subsidiary records at the time of audit fieldwork, all equipment had been properly tagged. A physical inventory performed at the end of the 2021-2022 year would not have included all assets purchased during the 2021-2022 year because of the assets that had not been added to the inventory records at the time of purchase and tagging, therefore a year end inventory would have been incomplete. Our testing of the physical existence of selected fixed asset items revealed three (3) instances where assets appropriately included in the inventory records were not found at the time of testing. The three (3) assets not located were two (2) chromebooks and one (1) ipad with an original combined purchase price of $1,249.43. The assets were purchased from the following federal grant: ALN 84.425U ARP ESSER III - $1,249.43 CAUSE: The school district personnel failed to follow established policies for the recording of purchased equipment meeting the criteria for inclusion in equipment subsidiary records to the subsidiary records. EFFECT: The effect is a breakdown in controls surrounding the safeguarding of equipment purchased with federal dollars. Equipment purchased for use in the federal program could be used for purposes not related to the program or converted to personal use. QUESTIONED COSTS: None RECOMMENDATION: The district should follow established policies and procedures outlining the safeguarding of equipment purchased with federal grant dollars. VIEWS OF RESPONSIBLE OFFICIALS: See the school district?s response in the auditee?s corrective action plan in this report.