2017-01 Performance Audit Report: Inventory Management at County of Hawai'i's Department of Public Works Highway Maintenace Division

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Our audit identified 19 items which were not timely discovered or reported as lost, missing, or stolen, supported by police reports, and taken off the inventory record system timely. These included five chainsaws, four weedeaters, three mobile radios, two pole pruners, two backpack blowers, one mower, hand trolley, and generator. The Division knew most of these items were either lost or missing during the prior year-end physical inventory count but did not file a police report or remove these items off the inventory records system. Only the Puna Road baseyard filed a police report within 24 hours for two stolen items valued at $780 after the baseyard was broken into. While the custodian was made aware that inventory was stolen, they did not report the theft to the Finance Director or prepared an equipment disposal record to remove the two stolen items off the inventory system. Because of the audit, the Division subsequently filed police reports for the remaining 17 unaccounted items and removed the 19 items off the inventory record system. By reviewing inventory controls, management could demonstrate proper stewardship and accountability over its available resources and effectively safeguard inventory from unauthorized personal use and disposition. The Division should timely document the condition of items and report when items are disposed. The clerk should transmit equipment disposal requests and police reports to help the Department of Finance, Property Management Division, DPW management, and Highway administration ensure physical inventory and inventory records are accurate and complete. Highway management should consider reviewing the 24 unauthorized disposals and the remaining 17 unaccounted items to determine, based on the cost of the county property (lost or damaged), if gross negligence by an accountable person occurred and if any reimbursement to the County is applicable. County employees are stewards of County resources and must ensure all public property and equipment are treated as a public trust and not be used in a proprietary manner or for personal purposes. By not accurately recording and accounting for inventory, there is an increased risk of fraud, waste, and abuse. Management may have difficulties in controlling or managing items purchased with County funds that are not properly recorded in the inventory system. DPW Highway Maintenance Division Inventory Management: Audit Results 116