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An unannounced inventory audit of the City Health
and Human Services Department’s pharmaceutical warehouse
concluded that internal controls are not adequate.
“Internal controls are essential to the proper safeguarding
and management of physical inventories purchased with
public dollars. It is especially important when dealing
with drugs, although I should note that no narcotics
or controlled substances were involved,” said Annise
D. Parker, Houston City Controller. The department
has offered assurances that it will work diligently
to address the findings and recommendations contained
in the report.
Auditors from the Controller’s Office sampled 60
different items from the warehouse inventory at 1116
South Braeswood. Their testing revealed significant
differences between the department’s records and the
actual inventory. The quantity on hand did not agree
with the auditors’ count for 95% of the items reviewed
and 44 (74%) of the items were not properly labeled.
Auditors also identified excessive amounts of inventory.
In some instances, there were enough items on hand
to last for ten years, given the current rate of usage.
Another area of concern was the absence of written
policies and procedures for proper record keeping
of inventory.
The findings are of concern; especially considering
an internal review by the Health Department, four
years ago, identified similar shortcomings. According
to the internal report issued in February of 2000,
“these weaknesses need to be immediately addressed
in order for the vital services of the pharmacy to
continue without interruption.”
The auditors have several recommendations for improvement:
- Periodic reviews to remove obsolete items from
stock.
- Routine inventory counts of frequently used items.
- Develop written policies and procedures for inventory.
- Train staff in recordkeeping.
- Establish maximum and minimum inventory levels.
- Attach labels to storage bins.
The Central Pharmacy has a total inventory valued
at about $500,000 and stocks everything from birth
control pills to prescription antibiotics.
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