Finding Text
Finding: Equipment Management
Program: Maternal and Child Health Federal Consolidated Programs
Assistance Listing Number: 93.110
Criteria: OMB Circular A-110 and 2 CFR 200.313 (c) through (e) require equipment records be maintained to include identification numbers, source of funding, location and condition of property; a physical inventory of equipment shall be taken at least once every two years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained.
Condition: We noted the following conditions in our testing of equipment management:
a) Equipment records were not maintained in accordance to 2 CFR 200.313, in which equipment is not identifiable with serial numbers or tags.
b) Internal controls were not in place to safeguard equipment at various locations.
Questioned Costs: None.
Context: Total equipment purchased in fiscal year 23 are in accordance with grant, however, testing was not possible to be performed as equipment records did not include tag numbers to identify individual equipment at the various locations. A manual listing was created by the grant manager during the audit that agreed to purchase records. Equipment was not capitalized within the general ledger system but rather expensed, as such, system records did not exist.
Effect: Not being able to produce a comprehensive and complete listing of assets purchased with federal funds, not properly tagging assets and not implementing internal controls to safeguard assets increase the risk of loss of assets purchased with federal funds and prevents them from being adequately tracked and maintained. In addition, the potential of noncompliance with the rules and regulations surrounding disposition of assets increases if the assets have been improperly disposed.
Identification as a repeat finding: Not applicable.
Recommendation: We recommend the Organization tags all equipment as soon as possible and perform a physical inventory count in order to create a complete equipment listing within its asset management system. In addition, we advise for the client to create an agreement between Organization and location/holder of property that clarifies ownership as well as compliance requirements for equipment purchased with federal funds with respect to safeguarding and maintaining such equipment. We also recommend for the Organization to establish an equipment policy and train individuals receiving grants in the requirements associated with equipment management and federal compliance requirements.
Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.