Indian Health Service
Millions of Dollars in Property and Equipment Continue to Be Lost or Stolen
GAO-09-450, Jun 2, 2009
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In 2008, GAO issued a report and testimony revealing gross mismanagement of property at the Indian Health Service (IHS). GAO found that 5,000 items with an acquisition value of $15.8 million were reported lost or stolen for fiscal years 2004 through 2007. GAO attributed the property mismanagement and waste to weak internal controls. GAO made 10 recommendations to IHS. IHS ultimately agreed to implement all 10 recommendations. Given the extent and seriousness of the property management problems at IHS, GAO was asked to determine (1) whether property loss, property theft, and wasteful spending continue at IHS; and (2) to what extent IHS made progress in implementing GAO's prior recommendations. GAO analyzed IHS property records from fiscal year 2008 through January 2009, conducted a full physical inventory at IHS headquarters, and performed a probability sample of information technology equipment inventory at six IHS field locations. GAO also examined IHS policies, analyzed documents, and conducted interviews with IHS officials.
IHS continues to lose property at an alarming rate, reporting lost or stolen property with an acquisition value of about $3.5 million dollars in little over a year, including new medical equipment. IHS management's failure to implement most of our June 2008 recommendations and hold staff accountable for losses contributes significantly to ongoing property problems. These property losses at IHS are in addition to what GAO identified in its June 2008 report. GAO completed a full audit of IHS headquarters and found that 126 items worth $216,000 (or 8 percent of the items tested) had been lost, stolen, or were otherwise unaccounted for. GAO also estimates that about 800 equipment items at six field locations with an acquisition value of about $1.7 million were lost, stolen, or unaccounted for. Furthermore, although IHS performed an annual inventory as GAO recommended, as of March 2009, it had not finished reconciling the inventory and cannot locate many items, including medical equipment. These items include a 2002 ultrasound unit valued at $170,000; a 2003 X-ray mammography machine valued at $100,795; dental chairs, cardiac and vital sign monitors; and a pharmacy tablet counter machine. Aside from issuing a memorandum from the IHS Director that restated and refined existing policies, IHS has taken little action to ensure that employees are aware of and complying with property policies. One way to enforce policies involves holding individuals accountable; however, GAO found that the Senior Service Executive in charge of the IHS property group and other areas was given a $13,000 bonus after GAO's report exposed mismanagement of property under the executive's purview. Furthermore, IHS could only provide one example of an individual held financially liable for lost or stolen property over a 1-year period; but at the time of our audit, the individual still had not reimbursed the government for the loss. GAO also identified the following examples where IHS investigated the loss of property but did not hold anyone accountable.
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Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
- In Process
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- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to develop and enforce procedures and deadlines to reconcile and update inventory records in a timely manner.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Open
Comments: IHS indicated all Areas and HQ offices completed the 2009 inventory by September 30, 2009, and that, going forward, inventories will be conducted annually. Inventory updates will be faciliated through an automated interface between the purchase order system and PMIS to reduce need for manual entries. 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 fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to establish specific deadlines and enforce them for finalizing a Report of Survey once an inventory has been completed so that research on missing items is completed expeditiously and does not continue indefinitely.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Open
Comments: IHS reported that it follows the Health and Human Services Report of Survey (ROS) process, which was enhanced in 2009 to include required timelines to complete the ROS and guidance on Board of Survey requirements. IHS stated that they will update their ROS policy in the Indian Health Manual accordingly. 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 fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to enforce policy to dispose of unused inventory in a timely manner.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Closed - Implemented
Comments: IHS indicated that a national interagency agreement with the Department of Defense was renewed in April 2009 which can be used by IHS headquarters and field offices to turn-in property that is no longer required or is in scrap condition. If an IHS location does not choose to use the DOD agreement for disposal purposes, that location will be required to demonstrate they have established an alternative agreement with another agency or organization (such as the General Services Administration) that will accept property disposals in a timely manner. IHS policy updates will establish specific timeframes for timely disposal and will emphasize the need for walk-through surveys at all IHS facilities to identify property items that are no longer needed.
Recommendation: The Director of IHS should strengthen IHS's overall control environment and "tone at the top" by fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to establish an approach to stop loss of property to include addressing region-specific inventory shortages.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Open
Comments: IHS responded that the hand receipts program is expected to greatly improve property tracking, reduce losses, and establish personal accountability. Also, Reports of Survey will receive increased management attention since they are now required to be reviewed by the Area Directors and provided to IHS HQ for additional oversight. 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 fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to work with Program Support Center (PSC) to develop procedures to remove disposed items from inventory records in a timely manner.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Open
Comments: In 2009, PSC issued guidance to all PMIS users on the document requirements and necessary forms to process "final events" (i.e., property disposal)in PMIS. Additionally, IHS will issue a revised property disposal policy to assist property managers. 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 fully implementing our prior recommendations and enforcing and updating its property management policies and procedures. As part of this effort, the Director of IHS should direct IHS property officials to work with PSC to develop procedures to enter overages in Property Management Information System (PMIS) in a timely manner.
Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service
Status: Open
Comments: Although the purchase order interface with PMIS is expected to reduce the number of inventory overages that have to be manually recorded to PMIS, IHS advised that PSC can be used to add IHS property overages to PMIS by uploading them from a spreadsheet format. This was demonstrated when one Area Office successfully used PSC in 2009 to complete inventory entries into PMIS. 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.