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Friday, June 2, 2023

OIG Tells Coast Guard to Improve Its Accounting for Non-Capitalized Personal Property Assets

The watchdog found that 56 percent of the Coast Guard’s non-capitalized personal property records sampled during the recent audit remain inaccurate and misstated.

Federal law and departmental guidelines require the U.S. Coast Guard to regularly inventory and assess accountable personal property under its control. This includes surveying property inventories and disposing of excess assets. In fiscal year 2021, the Coast Guard reported more than 248,000 assets at a gross cost of $27.3 billion. 

In 2012, the Office of Inspector General (OIG) recommended that the Coast Guard clarify topic areas to prevent conflict between Coast Guard policies and procedures in future revisions of the Coast Guard Personal Property Management Manual (PPMM). The clarification was intended to ensure that the Coast Guard PPMM reflected the actual processes and procedures various programs use to identify, screen, record, reutilize, and dispose of excess personal property.

Following this review, the Coast Guard released an updated PPMM in February 2013 and issued at least 15 supplemental guides on personal property management from 2014 through 2019. 

Now, a new OIG audit has found that the Coast Guard has improved its accounting of the identification and disposal of excess personal property since its 2012 review, but added that more can be done. 

The Coast Guard classifies personal property that meets capitalization criteria as capitalized or non-capitalized. Capitalized personal property has an acquisition value of $25,000 and greater if acquired prior to FY 2004, $50,000 if acquired prior to FY 2021, and $500,000 if acquired in FY 2021 or later. Non-capitalized mandatory accountable personal property generally has an acquisition cost between $5,000 and these capitalized values. 

In addition to the updated PPMM and supplemental guides already issued, OIG said the Coast Guard’s recent transition from Oracle Fixed Asset Module to the Financial System Modernizations Solution (FSMS) has improved controls over its non-capitalized personal property inventory, including centralizing access controls and restricting the units’ ability to access and edit records. However, OIG said the Coast Guard still needs to update its 2013 manual to incorporate supplemental guidance and other changes, as necessary, including the transition to FSMS. Coast Guard agreed and expects a full update by December 31, 2024.

The watchdog is concerned that 56 percent of the Coast Guard’s non-capitalized personal property records sampled during the recent audit remain inaccurate and misstated in FSMS. OIG said the Coast Guard should assess the data quality of FSMS to prevent the misuse or theft of non-capitalized personal property assets. The Coast Guard agreed and said it currently performs a robust reconciliation using the Capital Asset Management tool to compare the system of record to all subsidiary systems that manage the property. These processes are  being adapted to FSMS and the new interfaces that link some subsidiary systems. The Coast Guard expects this to be complete by the end of the year.

The Department of Homeland Security requires a 100 percent annual physical inventory for all accountable assets, but OIG said the Coast Guard does not fully comply with requirements to perform an annual physical inventory of all its non-capitalized accountable personal property. As of September 9, 2022, the Coast Guard reported it had inventoried 52 percent of its non-capitalized personal property. As a result, the watchdog believes that the Coast Guard’s non-capitalized personal property could be at risk of improper disposal, misuse, or theft. The Coast Guard said it plans to reach 100 percent compliance by the end of this fiscal year.

Read the full report at OIG

Kylie Bielby
Kylie Bielby has more than 20 years' experience in reporting and editing a wide range of security topics, covering geopolitical and policy analysis to international and country-specific trends and events. Before joining GTSC's Homeland Security Today staff, she was an editor and contributor for Jane's, and a columnist and managing editor for security and counter-terror publications.

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