Finding Text
Criteria: 2 CFR 200.313(d)(2) requires the non-Federal entity take a physical inventory of property and
reconcile the results with the property records at least once every two years. 2 CFR 200.313(d)(1) requires
“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…”
Condition: The University did not complete a full physical inventory at least once every 2 years as required
and did not reconcile the results with its property records. Additionally, one equipment item did not have a
fixed asset tag.
Context: The University’s Fixed Asset Policy and related procedures require inventories of property and
equipment to be conducted at least once every 2 years. In addition, each equipment item is required to have
a unique identifier or a fixed asset tag.
The University has 22 departments for which a physical inventory was required. We noted that in fiscal
years 2023 and 2024, physical inventories were conducted for 12 and 20 departments, respectively. In
2025, physical inventories for the remaining 2 departments were completed. However, as of June 30, 2024,
the inventory results had not been reconciled to the property records.
Further, in testing a non-statistical sample of seven equipment items we noted that one item did not have a
unique identifier or a fixed asset tag.
Cause: Although the University has established policies and procedures in place for the physical inventory
and reconciliation of property and equipment and fixed asset tagging, management indicated that staffing
limitations, combined with a campus relocation, closure of the Hawai‘i Loa campus and ongoing
construction of its science laboratories, hindered the University’s ability to complete the inventories and
reconciliations within the required timeframe.
Effect: Failure to perform physical inventory of property and reconcile the results with the property records
at least once every two years, and failure to properly tag equipment items resulted in noncompliance with
the equipment and real property management requirements which increases the risk of misappropriation,
loss, or inaccurate reporting of federally funded assets.
Questioned Costs: None
Identification of a repeat finding: This is a repeat finding of 2023-003.
Recommendations: We recommend the University review and update its current fixed asset inventory and
tagging processes to ensure compliance with the requirements. Specifically, we recommend the following:
1. Developing and implementing a corrective action plan to address the barriers that prevented timely
completion of the physical inventory and reconciliations, including:
• Assessing staffing needs and allocating adequate resources, whether through additional
personnel, temporary assistance, or reallocation of responsibilities, to ensure physical
inventories and reconciliations are completed timely.
• Establishing a formal timeline and monitoring process for conducting and reconciling physical
inventories of all departments within the required two-year cycle.
• Identifying opportunities to leverage technology or asset management software to streamline
and document the inventory and reconciliation process.
2. Ensuring that all equipment items are appropriately tagged or assigned unique identifiers in
accordance with its Fixed Asset Policy and 2 CFR 200.313(d)(1).
3. Providing training and guidance to responsible staff on the inventory process, reconciliation
procedures, and tagging requirements to reinforce accountability and ensure consistent application
of policies.
Views of responsible officials: The University initiated a thorough inventory process, including a
requirement to tag and photograph all assets, during the fiscal year ended June 30, 2024. The inventory
process was started on schedule in May 2024, and departments were asked to complete their inventory
procedures and sign off on the inventory reports by June 2024. Despite the additional complications created
by the University’s campus relocation project necessitated by the closure of the Hawai‘i Loa campus and
the construction of the science laboratories, 91% of the departments completed their inventories prior to
June 30, 2024. The remaining 9% of departments completed their inventories after requesting an extension
and/or providing additional details on the requested inventory items in the meantime, and these inventories
were completed during the fiscal year ending June 30, 2025. These results demonstrate improvement and
progress compared to the prior year’s finding in this area and illustrate the University’s commitment to
adhering to tits fixed asset inventory processes and procedures.
The University is committed to addressing these issues promptly and effectively to ensure compliance with
federal regulations. Accordingly, the University will conduct a thorough review of its inventory procedures,
timing, technologies, training resources, and resource allocations to ensure that the next inventory process
is designed to enable completion and reconciliation prior to the fiscal-year end, to include the tagging and
identification of all inventory items.