Finding 576211 (2024-007)

Finding 2024-007: Crime Victim Assistance Equipment Procedures Type of Finding: Compliance and Control U.S. Department of Justice Pass-through Entity: Michigan Department of Health and Human Services Assistance Listing Number: 16.575 Award Numbers: E20243445-00, E20243384-00, E20243038-00 Award Year End: September 30, 2024 Specific Requirement: (F.) Equipment Criteria: Section 200.313(d) of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-federal entity to (1) maintain property records that include explicitly required components, (2) perform a physical inventory of the property and reconcile the results with the property records at least once every two years, (3) develop a control system to ensure adequate safeguards to prevent loss, damage, or theft of the property with any suspected loss, damage or theft investigated. Questioned Costs: None. Condition: The listing maintained by the Organization for assets acquired with federal funds contained the necessary level of detail. However, a physical inventory was not performed and documented, and the results were not reconciled with the property records as required. Context: The Organization maintains a listing of fixed assets that it owns, and the listing properly contained all the required components. However, the Organization did not perform and document a physical inventory of the property and reconcile the results with the property records at least once every two years as required. The sample was not a statistically valid sample, and the matter appears to be a systemic condition. Effect: A control system has not been fully implemented to safeguard the fixed assets to prevent loss, damage or theft and promptly investigate missing items. Failure to perform a physical inventory of the property and failure to reconcile the inventory results with the property records could lead to the loss or misappropriation of these assets. Cause: The Organization was unaware of the requirements to perform a physical inventory of its fixed assets and reconcile the results with the property records at least once every two years. As a result, the Organization did not have proper policies and procedures in place to ensure that these required steps were completed. Repeat Finding: A similar finding was reported during the single audit for the year ended September 30, 2023. Recommendation: The Organization should perform a physical inventory of the property and reconcile the results with fixed asset records at least once every two years to help prevent loss, damage, or theft of the property. Views of Responsible Officials: The Organization agrees with this finding.