Finding 607479 (2022-001)

Compliance Matrix: Equipment and Real Property Management ? 14.228 ? Community Development Block Grants/State?s Program and Non-Entitlement Grant in Hawaii, Grant #B-06-BG-22-0001 Criteria: An entity must use, manage, and dispose of equipment acquired under a federal award in accordance with 2 CFR section 200.313 (d) (2) which requires a physical inventory of the property must be taken and results reconciled with the property records at least once every two years. Condition/Context: During our testing of the Community Development Block Grants/State?s Program, we noted that the City was unable to provide a reconciliation of the physical inventory to the property records. Cause: The City does not have adequate processes and controls in place to ensure that the physical inventory is taken at least once every two years and reconciled to the property records. Effect: The City could not provide supporting documentation that the required physical inventory and reconciliation to the property records was performed. Questioned Costs: For the purposes of this finding, there were no questioned costs. Identification of a repeat finding: This is a repeat finding from the previous audit, 2021-002. Recommendation: We recommend the City strengthen internal controls to ensure that the City maintains record of the physical inventory and reconciliations to the property records. Current Status: The City provided auditors? with documentation showing that a physical inventory of the property was conducted in January 2023. The physical inventory was conducted after the fiscal year- end of the compliance period being tested. Based upon the documentation provided to the auditors, we find the issue to be resolved.