Finding Text
Physical Inventory Observation
Federal Program Information:
Funding agency: U.S. Department of Health and Human Services
Title: Head Start Cluster
AL number: 93.600
Award number: 90CH01142504
90HE00049801C6
Criteria or Specific Requirement: Under 2 CFR 200 200.313(4)(2), a physical inventory of property
must be taken at lease once every two years. The results should be reconciled with the general
ledger.
Condition: CAPSC has not performed a physical inventory in the last two years.
Questioned Costs: None
Effect: The capital asset listing and corresponding financial statement balances may be misstated
or incomplete. Without taking a physical inventory, CAPSC may be overstating or understating
capital assets in its financial statements.
Cause: CAPSC has experienced turnover and, as a result, did not perform the physical inventory.
Repeat: No
Auditor's Recommendation: CAPSC should maintain its documentation of an entity-wide physical
inventory of its capital assets performed every two years. Once completed, the listing should be
reconciled to the general ledger control totals and the control totals adjusted to the balances
supported by the physical inventory results. CAPSC should also implement procedures to retain
adequate supporting documentation and ensure the proper recording of additions, deletions, and
depreciation on a timely basis.
View of Responsible Officials: CAPSC agrees with the audit finding and has written a corrective
action plan.