Finding Text
2 CFR § 3474.1 gives regulatory effect to the Office of Budget and Management Guidance in 2 CFR § 200.313(d) for the Department of Education, which states, in part, that a control system must be in place to ensure safeguards to prevent loss, damage, or theft of the equipment. It also requires that the recipient or subrecipient maintain property records that include a description of the asset, a serial number or other source of identification (including the FAIN), the source of funding for the property and other data to identify the equipment. Finally, it requires recipients or subrecipients to perform a physical inventory of property purchased with federal funds and reconcile the inventory results to the recipient or subrecipient’s property records at least once every two years.
Due to insufficient knowledge of and controls in place over the federal requirements related to equipment, the District could not provide evidence that a physical inventory over property purchased with Elementary and Secondary School Emergency Relief (ESSER) Fund (AL #84.425D) and American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) Funds (AL #84.425U) had been taken and reconciled with property records in the required timeframe. In addition, 30 of the 60 property items selected for physical observation were not properly tagged and could not be verified with the District’s property listing provided by management. The District maintains a list of students for which laptops and hot spots are issued, but due to insufficient controls and procedures over the issuance of laptops provided to students we noted, in addition to the 30 errors mentioned above, the District could not provide the property selected for physical observation for 28 of the remaining 60 property items tested prior to the end of the audit.
Lack of controls over equipment management and failure to complete the required inventory could lead to misappropriation of District assets and potential questioned costs and non-compliance with federal requirements.
We recommend the District establish control procedures over the management of equipment. Controls would include proper tagging of assets and regularly scheduled inventory dates. In addition, the policy should include procedures to ensure District assets under the control of students are regularly inventoried and verified.