City of Kenai, Alaska

Finding 2023-001 Equipment and Real Property Management - Significant Deficiency in Internal Controls over Compliance Agency Department of Transportation ALN and Program Name 20.106 – Airport Improvement Program, COVID-19 Airports Programs and Infrastructure Investment and Jobs Act Programs Criteria or Specific Requirement The regulations in 2 CFR Sections 200.313(d)(1) notes equipment and real property records must be maintained that include ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition During the year, the City disposed of an asset related to the airport that had been purchased with federal funding and applied the proceeds towards eligible grant expenditures. However, the disposal was not initially recorded in the accounting system and inventory records. Cause The City did not have an appropriate control in place to ensure timely maintenance of records for disposals of federal equipment and real property. Effect or Potential Effect The City was not in compliance with Equipment and Real Property requirements outlined in 2 CRF Sections 200.313, which could affect future awards. Questioned costs Not applicable. Context There was only one disposal during the year. The asset original cost was $259,140; net book value at the time of the disposal was $25,914. The proceeds from the sale of $8,100 were properly recorded in the books and records. Identification as a repeat finding Not a repeat finding. Recommendation We recommend the City reconcile disposals against sales at least annually and continue to conduct asset inventory procedures at least biannually. Views of Responsible Officials Management agrees with the finding and plans to complete and review an annual reconciliation of disposals against sales of assets.

Name of Contact Person: David Swarner Finance Director 907-283-8227 Finding 2023-001 – Equipment and Real Property Management - Significant Deficiency in Internal Controls over Compliance Corrective Action Plan Complete an annual reconciliation of disposals against sales of assets. The reconciliation is to be completed by the Controller and reviewed by the Finance Director. Conduct a biannual asset inventory and review of asset inventory procedures. The corrective action plan is expected to be implemented in FY2024 and incorporated in the year end checklist. Expected Completion Date: Already implemented.