Finding Text
Criteria or specific requirement: Per ?200.313, 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 Federal Award Identification Number (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. Per the Organization's additions to Property and Equipment Policy, expenditures for tangible assets used actively in business operations with a cost exceeding $5,000 and with a useful life exceeding two years should be capitalized. Also per ?200.313, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition: We noted the Organization is not in compliance with requirements related to the Equipment/Real Property Management of grants. Questioned costs: None. Context: During our testing, we noted the following exceptions: ? 1 out of 2 equipment samples totaling $13,306 was not capitalized and therefore not included in the either the departments fixed asset software or year end Property and Equipment financial balance. This asset was originally purchased in fiscal year 2021. As such, the auditor could not trace the equipment to a listing and properly identify the equipment through physical inspection. ? The organization did not complete the required 2 year physical inventory of equipment for 1 out of 1 federally purchased equipment. The equipment was originally purchased in June 2020. ? The Organization was not aware of the Equipment/Real Property Management CFR Requirements and lacks a process to ensure the Organization is in compliance with Equipment/Real Property Management CFR requirements. Cause: Management oversight; lack of effective internal controls addressing the purchase of equipment with Federal Funds. Effect: The auditor noted instances of noncompliance. Noncompliance can result in delayed reimbursement of eligible Federal expenditures or potential loss of Federal funding. Repeat Finding: Yes ? 2021-001 Recommendation: We recommend that the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization did have two purchases in FY21 that were expensed versus being capitalized. The Organization failed to follow the capital purchasing policy. The Organization has educated responsible parties of the capital purchasing policy to avoid future occurrences. The Organization has updated processes in fiscal year 2023 to ensure the purchasing policy is followed. The executive director of the program will conduct an annual physical inventory of federal purchased equipment.