Indian Health Service
IHS Mismanagement Led to Millions of Dollars in Lost or Stolen Property
GAO-08-727, 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."
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Recommendations for Executive Action
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
Status: Open
Comments: In March 2010, IHS indicated that all IHS Areas had fully implemented use of PMIS and that all accountable property had been included in PMIS. It also reported that PMIS training would be an ongoing priority so that staff have the information and skills needed to use all available property management tools, and that a contractor was conducting a gap analysis with the objectives of comprehensively updating property management policies and procedures and developing a property management charter to improve the overall property management governance structure. We will continue to monitor actions, and request a final update to include results of the agency's 2010 property inventory as well as the contractor's work.
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
Status: Open
Comments: IHS indicated it has policies and procedures in place to effectively safeguard property, with overall direction provided in a November 2008 special general memorandum from the IHS Director that discusses both supervisory and personal responsibilities for property management and security. IHS stated the agency enforces perimeter security at all agency locations and limits access to office and equipment storage locations to individuals with proper security clearances; additionally, with its hand receipt policy, agency employees have improved awareness of security needs, along with personal accountability . We will continue to monitor, and will request a final update based on results of the agency's 2010 property inventory and IHS's contract to update its property management program/structure.
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
Status: Open
Comments: IHS indicated that implementation of the hand receipt system prior to and during the 2009 inventory cycle provided IHS property offices the means to incorporate more accurate user and property location information in the property management information system. We will continue to monitor actions, and request a final update based on results of the agency's 2010 property inventory.
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
Status: Open
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. Also, separating/transferring employees are required to complete a clearance form to reflect that all property items assigned to them have been turned in. We will continue to monitor actions, and request a final update based on results of the agency's 2010 property inventory.
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
Status: Open
Comments: IHS reported that, with the completion of the 2009 inventory, all accountable and sensitive property items were reviewed and barcode tags were affixed. Going forward, IHS indicated that all appropriate property items will be barcode tagged. We will continue to monitor actions, and request a final update based on results of the agency's 2010 property inventory.
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
Status: Open
Comments: In response to this recommendation, IHS indicated that property offices are using hand receipts to implement an accountability system, by individual, for tracking personal property. This system enables IHS to identify a user for each accountable property item and maintain a system for all receipts--if an missing item cannot be located, the individual user may be liable for the loss and charged for its value. Management responsibility for this level of accountability is effected through SES performance plans that require Area Directors to complete annual physical inventories and issue hand receipts accordingly. We will continue to monitor these actions, and request a final update based on results of the agency's 2010 property inventory and IHS's contract to update its property management program/structure..
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
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 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
Status: Open
Comments: IHS has reported progress in addressing inventory shortages from its 2009 inventory and indicated that accountability improvements have been made (i.e., use of hand receipts to assign individual accountability for all accountable property, involvement by Area Directors in approving all Reports of Survey in their respective Areas in order to focus high-level management attention on inventory shortages and reconciliations, and centralizing all HQ offices' property management responsibilities into a single property office for improved accountability.) We will continue to monitor actions, and request a final update based on results of the agency's 2010 property inventory and IHS's contract to update its property management program/structure.
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
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 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
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.