SUBJECT:

Equipment Management Audit

Recently, the campus Equipment Management Division has been the subject of a
federal audit conducted by representatives of the Office of Naval Research in
response to the requirements of the Federal Acquisition Regulations (FAR),
the Department of Defense Federal Acquisition Regulations (DFAR) and the
Office of Management and Budget (OMB). Additionally, a second audit was
conducted by the representatives of KPMG Peat Marwick relating to the
University's annual A133 review.

While the results of the audits were favorable of UCSD's property system, the
audit team noted two areas of primary concern in which the campus should
expend maximum effort to meet the requirements of the previously mentioned
regulations. The particular requirements identified by the audit teams are:

1.  Physical Inventory, Article 34 Paragraph 3: The article states "A
physical inventory of equipment shall be taken and the results reconciled with
the equipment records at least once every two years." The auditors reiterated
the need for departments to perform timely and accurate inventories of all
property in their respective departments.

2.  Reports of Property Disposition and Transfers, Article 34 Paragraph 1
(vii), 1 (ix) and paragraph 3: This article addresses the requirement that
equipment transfer and disposition forms be submitted to the property system
to assure accurate and timely record. The auditors uncovered higher than
normal values of property write-off's resulting from what was logged as
"lost- unable to locate."

I cannot emphasize strongly enough the need for compliance with these
requirements or the potential repercussions should we fail in our duty to
comply. Therefore, I am asking all Department Chairs, Principal Investigators
and Management Service Officers to expend every effort in support of the
requirements referenced above.

Should you have any questions, or would like to discuss the details of these
requirements, please contact Roy Brown, Equipment Management, X44436.

Don Larson Assistant Vice Chancellor - Business and Financial Services