Inventory Management Requirements

Inventory Management Requirements
FY16 Georgia Educational Leaders Conference Savannah Riverfront Marriott February 22-24, 2016 11/17/2018

Presenters Grace McElveen Title I Education Program Specialist Georgia Department of Education School Improvement – Federal Programs (912) Kathy Pruett (706) Cathy Buescher Education Program Specialist Rural Education Achievement Program, Title VI, Part B (229) 11/17/2018

SCHOOL IMPROVEMENT & DISTRICT EFFECTIVENESS
11/17/2018

Agenda Why do an Inventory Function of An Inventory Definitions
Procedures for Inventory Management Off-site Use of Equipment Physical Inventory Equipment Use in Targeted Assistance Program Equipment Use in Private Schools Disposition Policy Loss, Damage or Theft of Equipment Common Equipment/Inventory Findings Introduce ourselves Go over agenda

Why Do an Inventory 2 C.F.R. Part Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Rewards Section – Equipment (d)(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, who holds title, the acquisition date, and cost of the property, the 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. There are several laws and regulations that require an inventory. One is EDGAR 80.20… Accountability for real and personal property Make sure the equipment is used for the purpose in which is authorized Ensures compliance with the laws in which the equipment was purchased. For example, if you purchased computers for a reading lab, which is allowable if that is the identified need, then the computers can not be used in a music classroom (unallowable for Title I)

Why Do an Inventory 2 C.F.R. Part Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Rewards Section – Equipment (d)(2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (Georgia requires inventory checks annually!) Section – Equipment (d)(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. There are several laws and regulations that require an inventory. One is EDGAR 80.20… Accountability for real and personal property Make sure the equipment is used for the purpose in which is authorized Ensures compliance with the laws in which the equipment was purchased. For example, if you purchased computers for a reading lab, which is allowable if that is the identified need, then the computers can not be used in a music classroom (unallowable for Title I)

Functions of an Inventory
Serves as a needs determination to assists LEAS in determining if additional materials and supplies need to be purchased in order to implement the district’s educational programs. Surveys the property in storage to determine if it is being (a) held for disposition, (b) in the process of production for disposition, or (c) to be consumed/utilized in the implementation of the district’s educational programs. inventory review requirements ensure that LEAs meet federal guidance for controlling and accounting for inventory in accordance with Title I, Part A laws and policies. The procedures and processes of an inventory have the following functions:

Functions of an Inventory
Tracks the property undergoing repair. Procedures include a process for repair and a work-in-process tracking system. Provides an inventory disposition process for the loaning and issuing of equipment, as well as the disposal process. inventory review requirements ensure that LEAs meet federal guidance for controlling and accounting for inventory in accordance with Title I, Part A laws and policies. The procedures and processes of an inventory have the following functions:

Definitions Equipment: of nonexpendable, tangible personal property having a useful life of more than one year. Supplies: tangible personal property that is considered consumable items. Pilferable (Walkable) Items: those items that may be easily be lost or stolen. Equipment: STATE Definition then say…..Regardless of the control levels selected, LEA Title I directors must develop and maintain controls to ensure that all Title I property is purchased in accordance with the LEA’s procurement procedures and that adequate controls are maintained to safeguard all equipment purchased with Title I funds. Therefore an inv entory shall be maintained for all tangible property with a useful life of one year, regardless of the acquisition cost. Supplies are considered to be consumable items…once used must be replaced…However, LEAs should have adequate internal control procedures that include a process for labeling and locating property, including supplies, purchased with federal funds. The information maintained about supplies purchased with federal funds will provide documentation to prove all costs are necessary, reasonable and allocable, as required under OMB Circular A-87. Pilferable Items: A January 2010 audit report by the Office of Inspector General (OIG) on the State of Pennsylvania’s Philadelphia Title I programs indicated that a large number of what was termed as pilferable items were not included on any inventory report. Pilferable items are defined as those items that may be easily be lost or stolen. There has been significant advancement in technology and many significant technology items are now available for well under $5000 per unit cost. As a result of the OIG 2010 Philadelphia Audit Report, items considered to be pilferable items and purchased with federal funds must now be included on any inventory report. Pilferable items would be but not limited to: cell phones, iPads, tablets, iPods, graphing calculators, software, projectors, cameras, camcorders, DVD players, computer equipment, and televisions.

Definition - Equipment 200.33 (pg 99)
Equipment: tangible, nonexpendible, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. Grantee may also use its own definition of equipment as long as the definition would at least include all equipment defined above. BRUSTEIN & MANASEVIT, PLLC

Definition - Supplies 200.94 (pg 106)
All tangible personal property other than equipment Computing devices are supplies is less than $5,000 Computing devices (pg 97) Machines used to acquire, store, analyze, process, public data and other information electronically Includes accessories for printing, transmitting and receiving or storing electronic information BRUSTEIN & MANASEVIT, PLLC

Internal Controls 200.302(b)(4) (pg 119)
Regardless of cost, grantee must maintain effective control and “safeguard all assets and assure that they are used solely for authorized purposes.” BRUSTEIN & MANASEVIT, PLLC

Equipment 200.313(a) and (c)(4) (pg127)
Conditional Title vests with the non-Federal entity. Cannot encumber the property without approval of federal agency or pass-through agency But When acquiring replacement equipment, may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property. BRUSTEIN & MANASEVIT, PLLC

Procedures for Maintaining an Inventory of Equipment
Acquisition of equipment Method for entering information into inventory management system Off-site use of equipment Physical inventory Equipment disposition Supplies disposition Lose, damage or theft of equipment Equipment use for Title I, Part A targeted assistance programs Equipment use for private schools Each LEA should have a process more maintaining an Inventory of Equipment: The components of inventory management as outlined in EDGAR 80.32(c)-(e) and 80.33(b) includes procedures for equipment use, equipment management requirements, equipment disposition and supplies disposition. These components are further defined by written procedures for the following areas: We will discuss each of these on the next few slides.

Requisition of Equipment
Determine the need and use of equipment. Purchases made in accordance the Title I federal regulations. Equipment must be reasonable and necessary. Follow internal control procedures for approval and receiving of equipment. Proper labeling of equipment. Issuing equipment to proper location. Inventory management procedures begin with a process of determining the need and use of the equipment. All equipment purchased with federal funds must be in accordance with the regulations of the funding source. The equipment purchased must also be reasonable and necessary for the purpose of the program. Once purchased, the equipment must continue to be used for that or a related purpose. The requisition for purchase of equipment should follow the LEAs internal control procedures. Procedures should be in place to ensure prior approval of all purchases and provide specifications for receiving the equipment, and issuing the equipment to the proper locations.

Entry of Information into Inventory Records
Title I director and principal of each school is responsible for inventory management. Procedures should be in place to ensure: all equipment is properly tagged. adequate safeguards related to loss, damage or theft. maintenance procedures to keep equipment in good condition. a physical inventory of equipment. Once equipment has been received the LEA must have a procedure in place for entering the information into the LEAs inventory management system. The Title I Director and Title I school principal is responsible for the management and inventory of such equipment. The inventory must be available for review and evaluation. One copy should be kept in the Title I school and another copy in the Title I district office. The written procedures should include the following requirements for equipment items purchased with federal funds. All equipment should be properly tagged and labeled for inventory tracking. The school shall retain such property in a program as long as there is need for such property to accomplish the purpose of the program for which it was purchased. The inventory must be current and available for review and audit.

Entry of Information into Inventory Records
Inventory Records should include: [2 C.F.R. Part (d)(1)] Description Serial Number/Identification Number Funding Source and Percentage of Source (including FAIN) Title Vendor Acquisition Date and Unit Cost Location Use (Student Instruction, Professional Development, Parent Involvement, etc.) Condition Disposition (including sale price, if applicable) A description of the equipment. A serial number, model number, or other identification number. The funding source and percentage under which the equipment was acquired. Note: Equipment purchased with federal funds shall be identified to indicate federal ownership by specific federal program (e.g. items purchased with Title I Part A monies must be marked as Title I, Part A with grant award year.) The source of property/vendor. The acquisition date and unit cost. The present location of the equipment. Indication of the use of the equipment. For example, Title I classroom, Title I afterschool program, Title I Administration, etc. The condition of the equipment. The date the information was reported on the inventory. Who holds title to the equipment? If funds from more than one program was used to purchase the equipment then each programs should be listed as the Title, and if possible, notation of percentage should be listed. All pertinent information on the final transfer, replacement, or disposition of the equipment (including the date of disposal and sale price of the equipment). Inventory must be updated as equipment items are purged or new purchases are made. Equipment items purchased with federal funds are to be identified and physically marked as noted above. Adequate safeguards must be in place related to the loss, damage, or theft of the equipment. Any loss, damage, or theft should be investigated and fully documented. Adequate maintenance procedures should be implemented to keep the equipment in good condition. A physical inventory of equipment items must be taken and the results reconciled with the inventory records at least once every two years.

Off-Site Use of Equipment
Written procedures to ensure effective tracking system for equipment used off-site. Possible components of the procedures: date signed out, purpose of use, person responsible, and condition of equipment upon return. The LEA shall develop written procedures for ensuring an effective tracking system for all equipment used off site. These procedures should include the process for requesting the use of and signing out Title I equipment utilized off site. A sample form is provided in the manual that includes documentation of the date the equipment was taken off-site, use of the equipment, person responsible for the equipment use, date the equipment was returned and the condition of the equipment on return.

Use of Equipment 200.313(c)(1) and (2) (pg 127)
Equipment must be used by the non-federal entity in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by the federal award. When no longer needed, may be used in other activities with the following priority: Projects supported by federal awarding agency Project funded by other federal agencies When used it may be shared (according to the above priorities) provided such use will not interfere with work on the original projects/programs. Exception – Private Schools (page 61) BRUSTEIN & MANASEVIT, PLLC

Physical Inventory Physical Inventory shall be taken and results reconciled at least once every two years. States may require standards above and beyond federal law – thus Georgia requires annual inventory checks Purpose of physical inventory is to verify the existence of equipment. current utilization of equipment – is equipment being used for intended purpose. the continued need of equipment. the condition of the equipment. A physical inventory of equipment purchased with federal funds shall be taken and the results reconciled with the equipment records at least once every two years in accordance with EDGAR 80.32(d)(1-2). Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference.

Physical Inventory If an LEA cannot locate an item purchased with federal funds, it is difficult to demonstrate the item was necessary for the performance or administration of the grant, reasonable, or benefitted the program that paid for the item.

Equipment Use in Targeted Assistance Programs
Equipment purchase for TA program must be reasonable and necessary to implement a properly designed program for Title I, Part A participants. Used with targeted assistance students, based on needs assessment. The standards will have been presumed to be met and the use of Title I, Part A equipment in non-Title I, Part A activities is proper if use does not exceed 10-percent of the time the equipment is used in Title I, Part A activities.

Equipment Use in Targeted Assistance Programs
If used on a less than full-time basis the equipment could be made available for other educational uses without interfering with its use in the Title I, Part A program. Equipment could be used on other projects or programs currently or previously supported by the Federal Government, “providing such use will not interfere with the work on the projects or programs for which it was originally acquired.”

Equipment Use in Participating Private Schools
Section 1120(d)(1) of the ESEA requires that the control of the Title I funds, and the ownership of the materials and equipment, purchased with Title I funds for private schools shall be in the LEA, and the LEA shall administer the funds, materials, equipment and property. This is an LEA responsibility rather than the responsibility of the private school.

District officials will: complete the requisitions forms for ordering materials and/or equipment. have the materials and equipment delivered to the LEA. sign for the delivery of the materials and/or equipment. label the equipment according to funding source to include the fiscal year of purchase and property of the respective school district.

District officials will: deliver the materials and/or equipment to the private school. store materials and equipment in a secure location when not in use. maintain an inventory of all materials, equipment, and property purchased with Title I funds for use with eligible Title I students at private schools. The inventory shall contain the same requirements for any equipment purchased with Title I, Part A funds.

Inventory must be updated as equipment items are purged or new purchases are made. Equipment items purchased with federal funds are to be identified and physically marked as such. Adequate safeguards must be in place related to the loss, damage, or theft of the equipment. Any loss, damage, or theft should be investigated and fully documented. Adequate maintenance procedures should be implemented to keep the equipment in good condition.

Disposition of Equipment 200.313(e) (pg 127)
When property is no longer needed in any current or previously Federally-funded supported activity, must follow disposition rules: Nonfederal entity must request disposition instructions from the federal awarding agency if required by the terms of the grant. BRUSTEIN & MANASEVIT, PLLC

Disposition of Equipment 200.313(e) (pg 127)
Otherwise, may be retained, sold or otherwise disposed as follows: Over $5,000 – pay federal share If equipment is sold: federal awarding agency may permit non-federal entity to deduct and retain $500 or 10-percent of the proceeds for selling and handling instructions. Under $5,000 – no accountability (still must formally dispose 11/17/2018

Disposition of Supplies 200.314 (pg 128)
If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federal award, must compensate the federal government for its share. BRUSTEIN & MANASEVIT, PLLC

Disposition of Equipment
Establish accounting for lifecycle of goods (Depreciation Methodology). When original or replacement equipment acquired with federal funds is no longer needed for the original project or program, the equipment may be retained, sold or disposed, if it is not needed in any other Title I, Part A like or federally funded project or program.

Procedures to eliminate any equipment item from the inventory Equipment items with an acquisition cost/current per unit fair market (explanation is provided in Definitions section) value of less than $5,000 and are more than three years old may be retained, sold or disposed, with no further obligation to the GaDOE. The disposition of such items should be so noted on the equipment inventory maintained by the LEA.

Procedures to eliminate any equipment item from the inventory, continued Equipment items with an acquisition cost of $5,000 or more may be retained or sold and the awarding agency (GaDOE) shall have a right to amount calculated by multiplying the current market value or proceeds from sale by the awarding agency (GaDOE’s) share of the equipment.

Procedures to eliminate any equipment item from the inventory, continued If the current per unit fair market value is $5,000 or more, the equipment may be retained or sold and the awarding agency (GaDOE) shall have a right to an amount calculated by multiplying the current market value or proceeds from the sale by the state’s share of the equipment. The entity is permitted to deduct and retain from the state’s share $500 or 10-percent of the sales proceeds, whichever is less, for the entity’s selling and handling expenses.

Procedures to eliminate any equipment item from the inventory, continued Forward a check made payable to the GaDOE in the amount of the state’s share. The amount is then returned to the state’s Title I LEA allocations fund. The disposition of such items should be so noted on the equipment inventory maintained by the recipient. The recipient should include the date of disposal and sales price or the method used to determine current fair market value if the recipient compensates the state.

Loss, Damage or Theft of Equipment
Control system for adequate safeguards to prevent loss, damage, or theft Process for investigation of any loss, damage or theft. Indicate the proper documentation needed to notify and report loss, damage or theft.

Loss, Damage or Theft of Equipment
Types of Controls Locks or security camera (for particularly valuable or vulnerable items). Access controls to warehouses to limit entry by unauthorized personnel. Use of logs or sign-in sheets for certain items of property; for example iPads, laptops, cameras, projectors. Procedures for promptly entering items received into the inventory management system.

Title I, Part A Monitoring Considerations
Is equipment purchased allowable for Title I purchase? Is equipment purchased reasonable and necessary? What accountability in is place for purchasing equipment and keeping an inventory?

Title I, Part A Monitoring Considerations
Does the equipment policy/procedures address the following: Definition of equipment Purchasing procedures Use of equipment Maintenance of equipment and inventory Physical inventory Safeguard of inventory Disposal of equipment

Title I, Part A Monitoring of Equipment
LEAs may be scheduled to have an on-site monitoring of inventory between September and December (mainly based on equipment expenditures) Scheduling does not necessarily follow Cross-Functional Monitoring schedule – Notification provided in August Monitoring conducted by your Title I Program Area Specialist LEAs will provide Inventory Management Procedures Actual inventories for Selected Schools Physical Inventories for Selected School

Common Findings Failure to maintain an equipment inventory No physical inventory conducted If no signature and date – Inventory essentially not conducted! Insufficient, outdated or no inventory management procedures Disposition Procedures Theft/Loss Reporting Procedures Transfer/Repurposing of Equipment Procedures

Common Findings (continued) Lack of sufficient documentation to support purchases Alignment of purchases with school’s needs assessment Quantities purchased deemed reasonable/necessary Mobile computer carts in storage/no record of check-out Unopened cases of equipment (some with ¼” of dust!) Alternate use of equipment “Repurposing” due to various factors is possible Equipment transfer must be documented

Common Findings (continued) Instances of fraud, waste and abuse Allowable purchases used in unallowable ways Missing items unaccounted for 11/17/2018

Title I, Part A Program Specialists’ Contact Information Area Name Office Telephone 1 Robyn Planchard (404) 2 Sherri Minshew TBD 3 Anthony Threat (706) 4 Evelyn Maddox (404) 5 Judy Alger (229) 6 Grace McElveen (912) 7 JaBra Harden (229) 11/17/2018

Title I, Part A Program Specialists’ Contact Information Area Name Office Telephone 8 Marijo Pitts-Sheffield (912) 9 Kathy Pruett (706) 10 Elaine Dawsey (478) 11 Olufunke Osunkoya (678) 12 Bobby Trawick (229) 13 Ken Banter (478) 14 Tammy Wilkes (478) 11/17/2018

Presenters Grace McElveen Title I Education Program Specialist Georgia Department of Education School Improvement – Federal Programs (912) Kathy Pruett (706) Cathy Buescher Education Program Specialist Rural Education Achievement Program, Title VI, Part B (229) 11/17/2018

Inventory Management Requirements
FY16 Georgia Educational Leaders Conference Savannah Riverfront Marriott February 22-24, 2016 11/17/2018

Inventory Management Requirements

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