Indian Health Service:

IHS Mismanagement Led to Millions of Dollars in Lost or Stolen Property

GAO-08-727: Published: Jun 18, 2008. Publicly Released: Jul 18, 2008.

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In June 2007, GAO received information from a whistleblower through GAO's FraudNET hotline alleging millions of dollars in lost and stolen property and gross mismanagement of property at Indian Health Service (IHS), an operating division of the Department of Health and Human Services (HHS). GAO was asked to conduct a forensic audit and related investigations to (1) determine whether GAO could substantiate the allegation of lost and stolen property at IHS and identify examples of wasteful purchases and (2) identify the key causes of any loss, theft, or waste. GAO analyzed IHS property records from fiscal years 2004- 2007, conducted a full physical inventory at IHS headquarters, and statistically tested inventory of information technology (IT) equipment at 7 IHS field locations in 2007 and 2008. GAO also examined IHS policies, conducted interviews with IHS officials, and assessed the security of property.

Millions of dollars worth of IHS property has been lost or stolen over the past several years. Specifically, (1) IHS identified over 5,000 lost or stolen property items, worth about $15.8 million, from fiscal years 2004 through 2007. These missing items included all-terrain vehicles and tractors; Jaws of Life equipment; and a computer containing sensitive data, including social security numbers. (2) GAO's physical inventory identified that over 1,100 IT items, worth about $2 million, were missing from IHS headquarters. These items represented about 36 percent of all IT equipment on the books at headquarters in 2007 and included laptops and digital cameras. Further, IHS staff attempted to obstruct GAO's investigation by fabricating hundreds of documents. (3) GAO also estimates that IHS had about 1,200 missing IT equipment items at seven field office locations worth approximately $2.6 million. This represented about 17 percent of all IT equipment at these locations. However, the dollar value of lost or stolen items and the extent of compromised data are unknown because IHS does not consistently document lost or stolen property and GAO only tested a limited number of IHS locations. Information related to cases where GAO identified fabrication of documents and potential release of sensitive data is being referred to the HHS Inspector General for further investigation. GAO also found evidence of wasteful spending, including identifying that there are about 10 pieces of IT equipment for every one employee at headquarters. GAO's investigation also found computers and other IT equipment were often assigned to vacant offices. GAO identified that the loss, theft, and waste can be attributed to IHS's weak internal control environment. IHS management has failed to establish a strong "tone at the top," allowing property management problems to continue for more than a decade with little or no improvement or accountability for lost and stolen property and compromise of sensitive personal data. In addition, IHS has not effectively implemented numerous property policies, including the proper safeguards for its expensive IT equipment. For example, IHS disposed over $700,000 worth of equipment because it was "infested with bat dung."

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to this recommendation, IHS indicated it has updated property management policies relative to our findings. Key areas addressed in updated policies include outlining and enhancing overall personal and supervisory responsibilities to account for, secure, and protect Government property; expanding the hand receipt requirement to include all accountable property issued to IHS employees; improving the handling of sensitive equipment; and upgrading procedures to account for IHS Headquarters? receipt, inspection, and disposal of property. To ensure implementation of these revised policies, beginning in FY 2009, IHS Area Managers were specifically evaluated on property management performance factors .

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to update IHS personal property management policies to reflect any policy changes that have occurred since the last update in 1992.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  2. Status: Closed - Implemented

    Comments: IHS has reported progress in addressing inventory shortages and indicated that accountability improvements have been made (i.e., use of hand receipts for individual accountability, involvement by Area Directors in approving all Reports of Survey in their respective Areas, and centralizing all HQ offices' property management responsibilities into a single property office for improved accountability.) In 2010, IHS updated its Indian Health Manual with a complete revision of its property management policies, procedures, and responsibilities. This update provides specific requirements and procedures to investigate instances of loss (including theft and inventory shortages), damage, destruction, and deterioration of government personal property, and to determine responsibility and establish the extent of financial liability of employees, if appropriate.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to investigate circumstances surrounding missing or stolen property instead of writing off losses without holding anyone accountable.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  3. Status: Closed - Implemented

    Comments: IHS management instructed Area Property Management Officers to conduct the 2008 physical inventory utilizing the Property Management Information System. IHS headquarters, National Programs, and the 12 regions conducted all physical inventories of accountable personal property by September 2008.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to enforce policy to conduct annual inventories of accountable personal property at headquarters and all field locations.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  4. Status: Closed - Implemented

    Comments: In October 2010, IHS updated its Indian Health Manual and revised its property management policies, procedures, and responsibilities. The property management directive requires designated property management officers (PMOs) and asset center representatives (ACRs) to oversee all property management functions at the various IHS locations and have overall responsibility for proper use, maintenance, and protection of property. Receiving agents are tasked to physically receive, inspect, and accept Government property in established receiving areas. The designated receiving agents will be the only individuals allowed to physically receive Government property, and are responsible for inspecting the property shipment to identify possible discrepancies and damage, tagging the property with a barcode, and notifying the ordering office that the property has arrived.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to enforce policy to use receiving agents to document the receipt of property and distribute the property to its intended user and to designate property custodial officers in writing to be responsible for the proper use, maintenance, and protection of property.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  5. Status: Closed - Implemented

    Comments: In accordance with the revised property management directive issued in 2010, the receiving agent, or other property official, will place an IHS barcode tag number on all accountable property after accessing the Property Management Information System catalog to determine what property items require tagging. For additional control and accountability, the tag number will be annotated on the receiving report for each respective property item.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to enforce policy to place bar codes on all accountable property.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  6. Status: Closed - Implemented

    Comments: IHS has indicated that all accountable property is tracked and controlled through the use of hand receipts, and that all Area Directors are evaluated on use of this accountability measure in their performance plans. Specifically, employees will account for personal property assets issued to them at the time of transfer, separation, change in duties, physical inventory, or on demand by the proper authority. Updating or reissuing of hand receipts is required to document any change in accountability. IHS reported that enforcement of the hand receipt system is tied to the performance requirements of all IHS Area Directors. In 2010, IHS placed a performance requirement in all twelve Area Directors' Senior Executive Service performance plans to issue hand receipts to all employees, thereby ensuring responsibility at the highest level of management.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to enforce policy to document the issuance of property using hand receipts and make sure that employees account for property at the time of transfer, separation, change in duties, or on demand by the proper authority.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  7. Status: Closed - Implemented

    Comments: As required by the 2010 IHS property management directive, the Property Management Information System (PMIS) must be continuously updated in order to reflect the current user and location of all accountable and sensitive property. For example, when personal property is relocated (i.e., between buildings, departments, etc.), the authorized property manager will update the location record in PMIS to reflect the change and maintain accountability over the asset. The user and location updates to PMIS are required for all personal property transfers both within and outside IHS.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to maintain information on users of all accountable property, including their buildings and room numbers, so that property can easily be located.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  8. Status: Closed - Implemented

    Comments: Property management policy, effective as of October 2010, requires that (1) all IHS controlled facilities, including warehouses and equipment yards, will be fenced or otherwise protected to ensure that materials are safeguarded against theft, pilferage, or unauthorized withdrawals, (2) all areas designated for the receiving and storage of personal property will have their access limited to authorized personnel only, (3) IHS facilities will maintain physical access control in accordance with applicable federal standards, and (4) all excess sensitive property will be locked in a cage, cabinet, or other secure location. Security and related support to protect property and equipment is provided by the IHS security component and/or the Federal Protective Service. IHS has reported that access to its facilities is limited to those who have the proper security clearances for each office and/or storage location, and that perimeter security is in place at all IHS locations.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to physically secure and protect property to guard against loss and theft of equipment.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  9. Status: Closed - Implemented

    Comments: IHS has indicated that all IHS Areas have fully implemented the use of PMIS. IHS Headquarters has placed an emphasis on PMIS training for all IHS property staff-- training was conducted at all IHS Areas in 2009 and 2010 and is an ongoing priority to ensure that staff have the information and skills necessary to effectively use the system. IHS's property management policy, updated in 2010, specifies that PMIS is the IHS system of record for the management of personal property and that all legacy systems used for tracking accountable property will be decommissioned and are not to be used to track accountable property.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to enforce the use of the Property Management Information System property management database to create reliable inventory records.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

  10. Status: Closed - Implemented

    Comments: On January 12, 2009, the Department of Health and Human Services (HHS) updated its policy on handling sensitive equipment, and IHS, in line with our recommendation, implemented the HHS policy change by adding blackberries to its definition of sensitive equipment. These devices are now to be entered and tracked in Property Management Information System, regardless of acquisition cost.

    Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by updating and enforcing its policies and procedures for property management. As part of this effort, the Director of IHS should direct IHS property officials to establish procedures to track all sensitive equipment such as blackberries and cell phones even if they fall under the accountable dollar threshold criteria.

    Agency Affected: Department of Health and Human Services: Public Health Service: Indian Health Service

 

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