CITY OF ZAVALLA, TEXASLocal Government

2024-011 Significant Control Deficiency and Noncompliance: Accounting for Capital Assets CFDA 14.228 – Community Development Block Grants/State Program and Non-Entitlement Grants in Hawaii Federal Agency: U.S. Department of Housing and Urban Development Passed Through: Texas Department of Agriculture/Texas General Land Office Award Number: CL7220530/22-082-017-D219 Award Years: February 1, 2020 to January 31, 2023/ November 19, 2021 to January 31, 2025 Funding Type: Indirect Compliance Requirement: F. Equipment and Real Property Management Condition. The City of Zavalla does not have a written capital asset management policy consistent with guidelines for federally funded projects. Criteria or Specific Requirements. As required by the Uniform Guidance, an entity that acquires equipment and/or real property with federal funds must implement an appropriate control system to safeguard and maintain the equipment and to provide for final disposal once the equipment is no longer needed. Possible Effect. Failure to implement the required policies and procedures could result in improper fixed asset tracking, potential loss or theft of assets, denial of future federal funding, and could subject the City to other penalties imposed by the relevant federal agency. Questioned Costs. None. Recommendation. We recommend that the City develop a written capital asset management policy, to be approved by the council, consistent with criteria as noted above (and consistent with the criteria listed in finding 2024-005, noted previously) to ensure compliance with all state and/or federally funded projects. Views of Responsible Officials and Corrective Action. See Management’s Responses to Findings and Corrective Action Plan on pages 62 to 64.