A. Purchased assets were not tagged and added to the inventory list.
From our sample of 20 furniture and equipment purchases made during the audit period, 27 individual purchased items were required to be on the inventory list. Two of the 27 items had not been assigned asset identification number tags and added to the list. Without tagging purchased equipment and adding it to the inventory list, MCLA risks loss of assets and may not know what assets may need replacing.
MCLA’s “Inventory Control Guidelines” state that all IT and non-IT equipment purchases of more than $1,000 “must be logged in and tagged by the College receiver.”
Reasons for Issue
According to MCLA officials, the purchased equipment was directly installed in a campus building and bypassed the Shipping and Receiving Department, which would normally tag items. In addition, MCLA’s “Inventory Control Guidelines” do not require departments that purchase equipment to notify the Shipping and Receiving Department when the equipment is incoming. Therefore, the Shipping and Receiving Department would not have known to look for the equipment and tag it once it had been received.
B. Tagged assets were not identified in the annual physical inventory.
During the annual physical inventory, MCLA did not attempt to locate 13 assets (valued at $27,604) out of the 27 assets from the invoices we reviewed that were required to be inventoried. Without a complete annual inventory, MCLA risks loss or theft of assets and an inability to assess inventory needs.
The Office of the Comptroller of the Commonwealth’s (CTR’s) “Accounting and Management” policy states,
There shall be an annual inventory taken of fixed assets owned by every Department [including colleges]. This inventory shall include, at a minimum, a verification of the existence and location of fixed assets owned by a Department. . . .
There shall be a reconciliation of the fixed asset inventory against the books and records maintained by the Department. . . . This reconciliation is to be done, at a minimum, on an annual basis.
MCLA’s “Inventory Control Policy” states, “On an annual basis the Inventory Control Officer will perform a physical inventory.”
Reason for Issue
MCLA officials stated that the incomplete annual inventory was due to a lack of personnel that made it difficult to perform daily duties on top of conducting the inventory.
C. The inventory list was not complete or accurate.
In our test of the inventory list, tracing items from the physical asset list to physical locations, we found that 10 of 20 sampled items did not match data from Great Plains. Specifically, 3 items were not tagged, 3 were in different locations from those listed, 2 had been recycled, 1 had been donated, and 1 had been disposed of. When we attempted to trace assets from their locations to the inventory list, 6 of 20 sampled items did not match data from Great Plains. Specifically, 5 items were missing from the inventory and 1 was in a different location. Without an accurate and complete list, MCLA risks loss or theft of assets.
CTR’s “Accounting and Management” policy states,
There shall be an annual inventory taken of fixed assets owned by every Department. This inventory shall include, at a minimum, a verification of the existence and location of fixed assets owned by a Department. . . .
There shall be a reconciliation of the fixed asset inventory against the books and records maintained by the Department.
Reason for Issue
MCLA officials stated that they did not have the staff and resources to maintain an accurate list.
- MCLA should amend its “Inventory Control Guidelines” to clearly delineate the responsibilities of the Procurement Department and the Shipping and Receiving Department to facilitate the identification and tagging of items to be inventoried as they are purchased and put into use.
- MCLA should perform an annual physical inventory of all fixed assets in its possession.
- MCLA should identify additional staff members to help conduct a complete physical inventory.
[MCLA] agrees with the finding. The College is in the process of investigating the purchase of a new inventory system, WASP, which will help improve the documentation and tracking of the physical inventory of fixed assets. The College will amend its Inventory Control Guidelines to delineate departmental responsibilities, and as suggested by the State Auditors the College will utilize individual departments to assist in performing the annual physical inventory.
Based on its response, MCLA is working to address the issues identified.
|Date published:||August 11, 2021|