Finding Text
Findings and Questioned Costs Relating to Federal Awards:
Finding No. 2023-001 - Equipment and Real Property Management:
Federal Program:
Research and Development Cluster
Name of Federal Agency:
U.S. Department of Health and Human Services
Category:
Other matters
Compliance requirement:
F. Equipment and Real Property Management
Criteria:
2 CFR section 200.313(d), Equipment Management Requirements, states that: 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.
Condition:
As a result of our audit procedures, we noted that the last physical inventory of property was taken on July 13, 2021, accordingly, the Foundation should have performed a physical inventory on or before July 13, 2023.
Cause:
The property inventory was scheduled for the fiscal year ended June 30, 2023, however, due to medical complications of the employee in-charge of fixed assets, the inventory was postponed.
Effect:
Conducting physical inventory ensures compliance with regulations and helps maintain accountability for the use of federal expenditures, prevents fraud and abuse, and helps identify surplus or underutilized equipment, leading to more efficient allocation of resources.
Questioned Cost:
None.
Context:
Since the last property inventory was taken on July 13, 2021, the next property inventory should have been performed on or before July 13, 2023.
Identification of a repeat finding:
This is not a repeat finding from the immediate previous audit.
Recommendation:
The Foundation should continue monitoring and reviewing guidelines for federal awards under the Research and Development Cluster to ensure it is current on the applicable requirements and changes therein. Also, there should be reminders set to the corresponding personnel to perform the property inventories, at least, every two years.