Finding Text
Finding Number: 2021-008
Prior Year Finding Number: 2020-008
Compliance Requirement: Equipment and Real Property Management
Program:
U.S. Department of Transportation
Airport Improvement Program
ALN: 20.106
Award #: Various
Award Year: Various
Criteria – 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 funding for the property (including the FAIN), who holds title, the acquisition date, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, 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, Internal Controls, requires that non federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition – We noted that the Authority maintains an equipment listing for fixed assets purchased with federal funding. However, the Authority was unable to provide complete property records which met the stated requirements. Additionally, 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 equipment management compliance requirements.
Cause – The internal controls established for the records maintenance and 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.
Effect or Potential 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.
Questioned Costs – None.
Context – This is a condition identified per review of the Authority’s compliance with the specified requirements.
Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to equipment record maintenance and physical inventory counts. There should be timely coordination and communication among all departments responsible for handling and managing such assets.
Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority recognize the importance of maintaining accurate and complete property records for fixed assets purchased with federal funding. A complete fixed asset inventory was conducted in 2023 and is now performed annually. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.