Finding Text
Condition
The School Board was unable to provide sufficient documentation for grant asset disposals. Four of the assets tested in the audit were missing and no disposal documentation could be provided.
Criteria
Federal regulations require asset dispositions to be reported to the grantor if the fair market value at the time of disposal is $5,000 or more to determine if a portion of the fair market value or sales proceeds needs to be reimbursed to the grantor. In addition, the disposal is required to comply with state law and properly reflected in the property records.
Cause
The School Board internal control policies and procedures were not operating effectively to ensure that all assets are properly safeguarded and/or properly disposed of in accordance with the Federal grant regulations.
Effect
Failure to properly document disposals and account for them properly could lead to a risk of misuse of assets.
Context
A sample of four disposals was selected for audit from a population of nine disposals. The test found that all four of the disposals tested did not have supporting documentation for the disposal. Our sample was a non-statistical sample.
Recommendation
The School Board should comply with the policies and procedures concerning asset disposals to ensure that all assets are properly accounted for and are disposed of properly.
Views of Responsible Officials and Planned Corrective Action
As assets become broken or obsolete, they are transferred to the warehouse for sale. This is evidenced by completing transfer forms which are signed by the principal or supervisor releasing the asset(s). Once an asset reaches the warehouse, it is segregated either by size or type. Large assets are normally itemized separately, while smaller items or computer related items are bundled together into a large gaylord box and sold as is. In this case, our auditors possessed signed transfer forms, but concluded during their review of disposals that the eventual asset itemizations were not sufficient or non-existent. Going forward, warehouse staff will commence their online auctions with full itemizations to show proof of disposal.