Finding Text
SECTION III ? FEDERAL AWARD FINDINGS AND QUESTIONED COSTS _____________________________________________________________________________________________________________________ FINDING NUMBER 2022-007 FEDERAL PROGRAM HEAD START CLUSTER (ASSISTANCE LISTING NUMBER 93.356/ 93.600) PASS-THROUGH PUERTO RICO ADMINISTRATION FOR THE CHILDHOOD CARE AND INTEGRAL DEVELOPMENT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 241-2022-000653/ 241-2021-000444/ 241-2021-000226/ 241-2020- 000139 TYPE OF FINDING COMPLIANCE AND INTERNAL CONTROL COMPLIANCE REQUIREMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT CONDITION During the equipment and real property management test, I noted the following situations: 1) The property subsidiary ledger of the Program was not available for examination. However, the Program?s personnel provided an equipment certification as of February 28, 2022. I selected a sample of six (6) purchases of equipment acquired during the fiscal year 2021-2022 and noted that five (5) of these purchases were not included in the equipment certification; 2) The Program personnel did not provide evidence that a physical inventory was performed during the fiscal year 2021-2022. CRITERIA 2 CFR 200.313, Equipment, (d) Management requirements, establishes the procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) 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, and 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 condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. CAUSE The Program?s internal controls and procedures were not followed adequately in order to guarantee adequate records, registering and safeguarding of property and equipment. EFFECT Without completion of a regular physical inventory and maintenance of an adequate property subsidiary record, the Program is at increased risk of theft or loss of equipment, it cannot be assured that Federal equipment records were accurately maintained, and it may not be aware of all equipment disposals or losses. RECOMMENDATION Management should update the property subsidiary ledger and a physical inventory must be made and properly reconciled. QUESTIONED COSTS None PRIOR YEAR FINDING Not applicable. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION As part of the Head Start program termination by the grantee, the capital assets subsidiary ledger has been updated by the Municipality?s finance department staff. It is important to comment that during the fiscal year 2021-2022, the Program employee in charge of the capital assets administration was removed from his position, as requested by the grantee, and, in an interim basis, another employee was assigned with such functions, in additions to his regular functions.