Finding Text
Finding 2022-002 ? Tracking of Equipment ? Material Weakness Program: Highway Planning and Construction AL No.: 20.205 Federal Grantor: United States Department of Transportation, Federal Highway Administration Passed-through: State of California, Department of Transportation Award No.: STPL-5009(030) Compliance Requirement: Equipment/ Real Property Management Condition: The City was unable to produce a list of equipment and real property purchased with federal funds. Some capital acquisitions in the year were identified as being grant-reimbursed, but the 5th Street construction project reimbursed by the major program was not identified. A physical inventory has also not been performed for federally purchased equipment and real property. Criteria: A list of equipment and real property purchased with federal funds should be maintained for tracking purposes as there are specific federal guidelines and requirements regarding these purchases and dispositions. Cause: The City did not have procedures in place to ensure all compliance requirements for this program are met. This is largely due to the material weakness finding on capital assets in Finding 2022-001, which was caused by the City not having completed an inventory count for a few years. Effect: The City may not be in compliance with the Uniform Guidance if federally acquired equipment have been sold and the proceeds were either not reimbursed to the Federal awarding agency or set aside to be used towards the purchase of a similar equipment. Work performed on the major program project was not adequately identified in the current year. Context: The program requires that for dispositions of equipment acquired under grants with a current per-unit fair market value of $5,000 or more, the Federal awarding agency is to be reimbursed for the Federal portion of the current market value or sales proceeds. Recommendation: After a full inventory is performed, the City should review all equipment and real property on hand and add an indication of which items are purchased with federal funds or create a separate listing of the ones that were acquired or had improvements made using federal funds. The list should be updated every time a federal purchase is made. City?s Response: