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

Home

Why should the County maintain accurate and complete inventory records? The County's risk exposure is greater when inventory and inventory records are not accurate and complete. Public monies are used to purchase County inventory. Maintaining accurate and complete inventory records demonstrates to the public the County's sense of responsibility, accountability, and the proper care and management of its assets. What is the County's inventory process? State law requires maintaining accurate and complete inventory records. Hawaii Revised Statutes (HRS) Section 103D-1208 requires designated property custodians to prepare and file with the County Council, a certified annual inventory of all County properties that must be signed under oath as to the accuracy of the inventory records. The Department of Finance Property Management Division (PMD) maintains inventory records and prepares reports. All activities related to inventory such as exchange, trade-in, sale, lease, donation, and disposal must be in accordance with the County's Inventory Procedures Manual and must receive prior authorization from the Finance Director before proceeding with any action. To add equipment to the inventory records system, the clerk responsible for inventory submits a list of new acquisitions/purchases using the County's additions worksheet. The purchase invoice is attached to this worksheet and the next sequential inventory number is assigned. This inventory number corresponds to a silver tag or label that is used to identify the equipment as County -owned. This inventory number should correspond to the additions worksheet and the numbers are unique to each baseyard/division/department. This helps ensure all inventory items are properly recorded in a systematic way and is properly identified as County -owned or controlled equipment. The overseer reviews and approves the list of additions. The clerk then submits the list of additions to the Division and Department accountant for review. The additions list and purchase invoices are then submitted to the PMD on a quarterly basis. To take equipment off the inventory records system, the overseer examines the equipment and determines the reason for the disposal (e.g., obsolete, not economical to repair, lack of replacement parts, damaged beyond repair, etc.). The clerk submits the equipment disposal form with the justification for the disposal. When equipment is lost, missing, or stolen, a police report or police report number should be attached to the equipment disposal form as instructed by a Department of Finance memo. To transfer equipment within the County, the clerk submits an equipment transfer form stating the reason for the transfer. Equipment disposals and transfer forms may be submitted year-round to PMD. DPW Highway Maintenance Division Inventory Management: Background 14