Audit finds inventory problems at Public Works

HILO — Inadequate inventory control at county Public Works baseyards allowed chainsaws, string trimmers, a generator, lawnmower, digital camera and other items to walk off the job.

In other cases, items, materials and supplies — including a pile of treated lumber worth $140,765 — were found at baseyards with no record of them in the inventory system, according to a report recently released by the legislative auditor.

“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,” Auditor Bonnie Nims said in the report. “By not accurately recording and accounting for inventory, there is an increased risk of fraud, waste and abuse.”

Auditors concluded in a Feb. 2 report that 78 percent of the DPW Highway Maintenance Division’s inventory was properly accounted for using an inventory system. However, control of at least 179 items, worth $175,500, did not follow county inventory policy and procedures.

The report will be presented to the County Council at an upcoming meeting, likely next month. It covered the period between July 1, 2015, and Dec. 31, 2015.

It recommends tightening of procedures, updating the county’s Inventory Procedures Manual, which hasn’t been updated in 17 years, and training employees, among other recommendations.

The update will begin soon.

“The Department of Finance will work on issuing an updated Inventory Procedures Manual for the county,” said Finance Director Collins Tomei in a response to the audit.

The Highways Division was chosen for investigation because auditors identified large quantities of small and attractive inventory items considered sensitive, portable and prone to theft in comparison to other DPW divisions. All seven baseyards were inspected.

“DPW Highway Maintenance Division’s inventory management system lacks sufficient internal controls, including independent monitoring, proper recording and disposal of inventory, continuously tracking of items prone to theft, adequate safeguarding, training of employees and written policies and procedures,” Nims said.

“Due to these internal control weaknesses, as well as errors in processing inventory, physical inventory and inventory records were inaccurate and incomplete,” she added.

Public Works Director Frank DeMarco, who wasn’t in that role during the audit period, listed in a three-page response a number of changes being made to improve inventory controls. The department has created its own Inventory Procedures Manual, has initiated training and is considering a new inventory control system and possible security systems for baseyards, DeMarco said.

Of the 414 items reviewed, auditors could not physically locate 24 items, including seven mobile radios, five chainsaws, three string trimmers and one generator, mower, pole pruner, vacuum, digital camera, printer, calculator, backpack blower and sprayer.

In addition, the audit identified 19 items that 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 string trimmers, three mobile radios, two pole pruners, two backpack blowers, and one mower, hand trolley and generator.

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, the theft was not reported to the finance director, nor was an equipment disposal record prepared to remove the two stolen items off the inventory system.

Because of the audit, the Highways Division subsequently filed police reports for the remaining 17 unaccounted items and removed the 19 items off the inventory record system, the audit said.