Finding Text
Finding 2023-005 – Material Weakness: Equipment and Real Property Management – Compliance and Control Finding
ALN 84.031 – Title III – Higher Education – Institutional Aid
Federal Agency: U.S. Department of Education
Pass-Through Entity: None
Criteria Or Specific Requirement: 2 CFR section 200.313{c}, requires grantees have the following for equipment purchased with grant funds with a useful life of more than one year and a per-unit acquisition costs which equals or exceeds the lesser of the capitalization policy of the grantee or $5,000:
• Equipment must be used in the program for which it was acquired;
• Property records must be maintained that include a description of the property, a serial number or other identification numbers, the source of the funding for the property, who holds title, the acquisition date, cost of the property, percentage of federal participation in the projects cots, the location, use and condition of the property, and any ultimate disposition data for the property;
• A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years;
• A control system must be developed to ensure safeguards to prevent loss, damage or theft of the property;
• Adequate maintenance procedures must be developed to keep the property in good condition.
In addition, the Uniform Guidance requires that controls over compliance be properly designed, in place and operating effectively to ensure compliance with these requirements.
Condition: The University does not have a process in place to ensure federally funded equipment is subjected to a physical inventory observation at least once every two years.
Cause: Management charged with oversight over the federal grant could not support their compliance with these equipment and real property management requirements under the Uniform Guidance. Additionally, controls over compliance were not designed effectively to ensure compliance with such grant requirements.
Effect: Instances of noncompliance were not detected by management.
Questioned Costs: Not applicable.
Context: Based on a sample of equipment from the capital asset listing, the location for equipment purchased in previous grant years is not property tracked by management. An inventory of all equipment purchased with grant funds prior to 2022 has not been completed within the last two years.
Identification As A Repeat Finding: 2022-011 and 2021-017
Recommendation: We recommend that management document its equipment and real property management policies for purchases under federal grants and hold training specific to these documented policies for those responsible for grant compliance. We also recommend that management conduct a physical inventory observation for all equipment purchased with grant funding.
Views Of Responsible Officials: The University has implemented guidelines for categorizing equipment and supplies. Additionally, HSSU is presently exploring an Asset Management software solution to facilitate inventory tracking and intends to carry out biannual inventory audits.