Indian Health Service: Millions of Dollars in Property and Equipment Continue to Be Lost or Stolen

GAO-09-450 Published: Jun 02, 2009. Publicly Released: Jun 02, 2009.
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Highlights

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.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Indian Health Service 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.
Closed – Implemented
IHS property management policy established in October 2010 requires that personal property inventories conducted by IHS Headquarters and Area offices must be completed no later than June 30th in any given year, and all reconciliation procedures, including Reports of Survey, are to be completed by September 30th. Inventories in 2010 and 2011 for IHS Area and HQ offices were reported to have been completed by the September 30th deadline; inventory adjustments have improved and property losses have been reduced each year through the use of the property hand receipt system and with the increased oversight and monitoring at the HQ level.
Indian Health Service 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.
Closed – Implemented
The 2010 property management update provides specific requirements and procedures for IHS to investigate personal property losses due to theft and inventory shortages, as well as losses due to damage, destruction, and deterioration of government property. To better faciliate these investigations, IHS has incorporated a streamlined process to complete Reports of Survey (ROS) in 90 days from the ROS initiation date. Also, officials authorized to make final determinations based on the results of ROS investigations are limited to IHS Area Directors in the field and one senior official at HQ. To expedite cases where the value of property involved in any single ROS does not exceed $2,499 and there is no suspected theft or misappropriation, a single survey officer, in lieu of all participants in a board of survey, is permitted to investigate and provide the facts, conditions, findings, and recommendations to the determining official.
Indian Health Service 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.
Closed – Implemented
The October 2010 property management policy provides updated guidance on IHS property disposal. All IHS activities are required to survey personal property under their control to assure maximum use of all property and to identify any excess property. At a minimum, these utilization inspections will occur during annual physical inventories. IHS has a national interagency agreement with the Department of Defense in force that can be used by IHS headquarters and field offices to turn-in property that is no longer required or is in scrap condition. Other options include disposal through authorized recyclers, such as UNICOR, property donation/sale through GSA, and, when no other means for disposition are available, IHS will dispose of property through the federal abandonment and destruction process.
Indian Health Service 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.
Closed – Implemented
At an overall level, the IHS property management program is now subject to an annual OMB Circular A-123 risk assessment and was included in a Program Integrity Risk Assessment in 2011. Property management policy established in October 2010 requires that property inventories conducted by IHS Headquarters and Area offices must be completed no later than June 30th in any given year, and all reconciliation procedures, including Reports of Survey, are to be completed by September 30th of that year. Reports of Survey have received increased management attention since they are now required to be reviewed by Area Directors in the field and provided to IHS HQ for additional oversight. During 2010 and 2011, IHS indicated that 29 determinations of employee financial liability for property loss or damage came from Results of Survey investigations.
Indian Health Service 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.
Closed – Implemented
In October 2010, IHS issued its revised personal property management policy, which included property disposal requirements and procedures to assist IHS property managers. The disposal policy states that general property will be removed from the asset accounts during the period of disposal, retirement, or removal from service, and IHS property managers will ensure that all disposal documentation is completed and forwarded to PSC, per the established disposal procedures, in order to remove the asset record from PMIS in a timely manner. As of July 2012, IHS reported there is no document processing backlog of property disposal actions at PSC.
Indian Health Service 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.
Closed – Implemented
IHS indicated that, although some property assets must still be manually added to PMIS, an automated purchase order interface with PMIS, has reduced the number of property purchases that have to be manually recorded. From prior years and up through 2010, a backlog of about 12,000 property transactions existed that were not automatically entered into PMIS. IHS reported this number decreased to under 5,000 transactions in 2011, and is under 1,200 transactions as of July 2012.

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