Finding Text
Coronavirus Relief Funds ALN 21.019 2022-007 EQUIPMENT AND REAL PROPERTY MANAGEMENT Statement of Condition: The Municipality has not complied with the property management requirements. There were no physical inventories performed during the fiscal year ended June 30, 2022. During the fiscal year ended June 30, 2022, Coronavirus Relief Fund acquired equipment amounting to $399,890. NONE The Municipality of Las Piedras does not have a subsidiary ledger of equipment acquired with federal funds, however, such subsidiary ledger shall comply with federal requirements because it should: (1) have information needed to calculate the federal share of the cost of the equipment, (2) identify the grant under which the program acquired the equipment, (3) have information about the location, use and condition of the equipment and the date the information was obtained, and (4) have all pertinent information on the ultimate transfer, replacement, or disposal of the equipment. Furthermore, there is no evidence that the total amount of capital expenditures and the composition of capital assets incurred with federal funds have been reconciled with the general ledger or other control account to enhance the controls to prevent unauthorized disposition of assets. Criteria: CFR 200 ?200.313 established that the Municipality should take the physical inventory and reconcile the results with the property records. In addition, Section (d) (3) establishes that a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Federal regulations also require that, every two years, at a minimum, a physical inventory shall be conducted and the results shall be reconciled with property records to verify the existence, current utilization, and continued need for the equipment. Any discrepancies between quantities determined by the physical inspection with those shown in the accounting records shall be investigated to determine the causes of the differences. Property records shall be accurate. Property records shall include the following for each item: ? A description of the equipment including manufacturer?s serial numbers. ? Identification number, as the manufacturer?s serial numbers. ? Identification of the grant under which the recipient acquired the equipment. ? The information needed to calculate the federal share of the cost of the equipment. ? Acquisition date and unit acquisition cost. ? Location, use and condition of the equipment and the date the information was obtained. ? All pertinent information on the ultimate transfer, replacement or disposal of the equipment. Cause and Effect: These instances of non-compliance occurred because the Property Division of the Municipality has not enforced the requirement to perform a capital assets inventory and to ensure the proper accountability of capital assets during the fiscal year ended June 30, 2022. Accordingly, the Municipality?s internal controls in place over capital assets are not designed to effectively account for capital assets, since it do not allow for the reconciliation of detailed property records with the general ledger. These inadequate property internal controls may expose the Municipality to questioned or disallowed costs by the federal government for lost or stolen property. This condition represents a material weakness in the Municipality?s internal controls over financial reporting. Furthermore, this situation represents a significant risk of loss of capital assets because there is a lack of accountability for acquired capital assets. Any federally funded capital assets lost would need to be repaid to the federal government with municipal funds. Recommendation: A physical inventory of the Federal Programs capital assets should be taken as soon as possible. Physical inventory amounts should be reconciled with the property recorded on the subsidiary ledgers. This information should be reconciled with the monthly disbursements made against the budgetary accounts used for property acquisitions. Dispositions must also be made only upon approval of the Municipal Property Administrator and the Finance Director.