Finding Text
Finding Number: 2019-007
Prior Year Finding Number: N/A
Compliance Requirement: Equipment and Real Property Management
Information on Federal Program(s) - U.S. Department of Transportation:
Direct Program:
Federal Aviation Administration
Airport Improvement Program
CFDA Number: 20.106
Criteria or Specific Requirement – Per 2 CFR section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, cost of the property, percentage of Federal participation in the cost of the property, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property.
Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment.
Additionally, the Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
Condition – The Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017.
Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the physical inventory count requirement.
Questioned Costs – Not determinable.
Context – This is a condition identified per review of the Authority’s compliance with the specified requirements.
Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received.
Cause – The internal controls established for the physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count.
Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to performing physical inventory counts of equipment. There should be timely coordination and communication amongst all departments that are responsible for handling and managing such assets.
Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The planned corrective actions are presented in the Authority’s Corrective Action Plan which is attached as Appendix B.