City Controller: Hundreds of Items - Totaling $398,000 - Missing [UPDATED]
by Chelsea Cody
Hundreds of Other Items Purchased More Than a Year Ago, Sitting Unused
City Controller Wendy Greuel released an audit today showing that various City departments could not locate hundreds of items purchased with taxpayer funds, and that hundreds of other items had been sitting unopened or unused for up to 7 years.
“With the City facing such a large budget deficit, it’s essential that any equipment that we are able to purchase is easily located if needed and utilized immediately. It’s critical that keep tight controls on the City’s scarce resources,” said City Controller Greuel. “Unfortunately we found in this case that no one was minding the store.”
City Controller Greuel’s audit examined how the Department of Recreation and Parks (RAP), Bureau of Sanitation (BOS), and the Information Technology Agency (ITA) track equipment purchased with taxpayer funds. With the City facing a massive budget deficit, it is critical that any equipment purchased in the past is utilized immediately and easily located if needed. Overall, the audit found oversight of equipment location and use to be severely lacking.
Some of the audit’s findings included:
Of 254 items that we attempted to locate, 115 were not where they should have been. While 56 items were ultimately found in the wrong location, 59 were unable to be located at a cost of $938,000.
Some of the items that were never found included a video recorder purchased by ITA for almost $60,000.
Departments are supposed to conduct a physical inventory of items every two years to maintain accurate physical inventories of equipment.
ITA and Sanitation have not conducted a review in at least 5 years and Recreation and Parks has not conducted a review of all items in at least 7 years.
ITA and Recreation and Parks have 138 items that were purchased at least 1 year ago, still in warehouses or staging areas. These items are worth $237,000, and some were purchased over 7 years ago.
Some of the items not placed into service included 9 microwaves, 1 deep fryer and 2 television sets by the Recreation and Parks Department and various computer equipment by ITA.
Controller Greuel's Audit Cover letter:
The Honorable Antonio Villaraigosa
The Honorable Carmen Trutanich
Honorable Members of the City Council
In a City the size of Los Angeles, facing a $222 million deficit this fiscal year, tracking equipment is essential to maintaining control of the City's scarce resources. I joined the Mayor in authorizing a Citywide spending freeze on all equipment purchases last month, making it even more important for any equipment purchased in the past to be utilized immediately and easily located if needed. Unfortunately, this audit found that is not necessarily the case.
Attached is an audit we recently conducted, looking at how the City monitors and uses fixed assets and equipment purchased. We examined the Recreation and Parks Department (RAP), the Information Technology Agency (ITA) and the Bureau of Sanitation (BOS). Overall, we found oversight of equipment location and use to be severely lacking.
The City uses several automated systems to track purchased equipment. With a few exceptions, all Council-controlled departments are supposed to utilize these systems to ensure that items are not misplaced or stolen, and are being used properly.
Out of a relatively small sample, our auditors were initially unable to find nearly 45% of the items purchased with taxpayer money. Although some items were ultimately found in the wrong locations, dozens of items, worth nearly $1 million, still cannot be found. Additionally, we found items worth hundreds of thousands of dollars during physical inventories that had not been logged in to be monitored.
We also located 138 items that appear to be worth nearly $250,000 purchased years ago, sitting in warehouses or staging areas unused. In short, no one is minding the store. It is disturbing to think that the City does not have any consistent policy to track items that are mobile and are highly susceptible to theft even if the cost is less than $5,000. There is no way of knowing how many additional items cannot be found or are sitting unopened in storage.
Some of the specific findings of the audit include:
Of 254 items that we attempted to locate, 115 were not where they should have been. While 56 items were ultimately found, 59 were unable to be located at a cost of $938,000.
Some of the items that were never found included a video recorder purchased by ITA for almost $60,000, and 2 gas analyzers purchased by BOS for nearly $250,000.
Of 167 items that we located that should have been in the City's monitoring systems, 49% of them were not.
Because the City's current tracking systems are not ideal for monitoring items in these particular departments, the departments have developed their own systems to track assets. While it appears these systems are kept up to date, the departments need to follow City procedure so items purchased with taxpayer money can be properly tracked. Once the City's budget situation improves, a new tracking system should be implemented to address the needs of different departments.
ITA and Recreation and Parks have 138 items that were purchased at least 1 year ago, still in warehouses or staging areas. These items are worth $237,000, and. some were purchased over 7 years ago.
Some of the items not placed into service included 9 microwaves, 1 deep fryer and 2 television sets by the Recreation and Parks Department and various computer equipment by ITA.
Departments are supposed to conduct a physical inventory of items every two years to maintain accurate physical inventories of equipment ITA and Sanitation have not conducted a review in at least 5 years and Recreation and Parks has not conducted a review of all items in at least 7 years.
The City Controller's Financial Reporting Division needs to provide better oversight on Departmental responses to their inquiries over the status of fixed assets so that the asset amounts are accurately stated in the City's financial statements.
We simply cannot afford to let taxpayer 'money be wasted by misplacing equipment or letting new items sit unopened in storage. During these difficult economic times, it is easy to cut back on oversight, which make fraud and abuse more likely. However, I must urge you that now more than ever, we must remain vigilant in ensuring that every taxpayer dollar must be spent AND used efficiently and effectively.
Sincerely,
Wendy Greuel
City Controller
An audit, to be released later today, conducted by Los Angeles City Controller Wendy Greuel has found that several city departments cannot account for hundreds of items bought with public funds.
The controller attributed the issue to three specific departments whose lax oversight failed to keep track of various items after they were purchased.
Of the 254 items lost, 115 were found to be in the wrong place and 59 others - worth $938,000 - could not be accounted for.
From the LA Weekly:
Greuel found $237,000 worth of goods purchased by the technology agency and the Department of Recreation and Parks languishing in warehouses or staging areas for at least one year. In fact some of the those times, which included microwave ovens, television sets and one deep fryer, were bought seven years ago, Greuel stated.
From LA Now:
The audit by Controller Wendy Greuel found that three city departments could not immediately find more than 100 items they had purchased over the last seven years at a cost of $5,000 or more each, according to a news release from Greuel's office.
Greuel conducted an audit of the Department of Parks and Recreation, the Bureau of Sanitation and the Information Technology Agency...
Also see the letter written by Wendy Greuel
www.ourla.org/latest/2041-city-audit-hundreds-of-items-totaling-398000-missing