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

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Items considered sensitive, portable, and prone to theft are not continuously tracked The County defines items that can easily go missing as sensitive, portable, and prone to theft and should be continuously tracked. However, DPW management has not yet identified these type of items. The Division should use a risk-based approach to identify items that can be easily stolen or used for personal benefit and continuously track these items. One example of high risk items that should be continuous tracked is common size tires for light trucks. These items should be consistently reconciled and have their own in/out log. Maintaining in/out logs for at -risk items would help the Division detect, deter, and prevent irregularities in inventory shrinkage and support the reconciliation process. Effective maintenance of material and supplies inventory includes: accurate and timely recording of purchases • recording of transfers and issues (amount of inventory issued to All equipment and work crew) inventory should be • clear, complete, and accurate identification of stock items continuously tracked • proper storeroom security to prevent unauthorized personnel J from gaining access to the inventory. When items prone to theft are removed from the warehouse they should be consistently recorded and continuously tracked to establish who is responsible in case items are lost, missing, or damaged. In addition, periodic physical inspections should be conducted to determine if any items are lost, missing, or damaged. When commonly used items are assigned to select personnel, they are personally accountable for these items and should use a daily Sign In/Out log to account for them. When there are discrepancies, the employee reports it to the custodian (supervisor/overseer/chief/director). The purpose of employee assignment is to: (1) identify, assign, and hold the employee accountable for inventory in his/her custody, and (2) expedite the annual physical count of inventories. Because of inadequate training and the nature and scope of work performed on a daily basis, there were some items we could not locate and account for. On average, it took audit staff an entire day at each baseyard, searching for most items because Division staff did not have reliable information to know the location and condition of their inventory. In general, staff did not know if items were in -use, on the truck, borrowed/lent-out, out -of -service, at the repair shop, which equipment operator previously used it, or the item's last physical location. Some overseers did not keep a record of their physical inventory and did not know that at least two of their controlled assets were at the repair shop. The Puna Road baseyard was the only baseyard that was able to identify the location and condition of their entire recorded inventory by providing a list of in -use equipment and a record of the one equipment at the repair shop during the audit. In addition, we found the Hamakua Road baseyard and the Ka`u Road baseyard could account for all their controlled assets listed on the inventory report. DPW Highway Maintenance Division Inventory Management: Audit Results 117