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An unannounced inventory audit at the Houston Public
Works and Engineering Department's Northeast Regional
Street and Storm Maintenance Center has identified
possible criminal wrongdoing.
We found evidence indicating that one Material Requisition
Form had been altered and others may have been altered
or falsified to conceal inventory shortages," said
Judy Gray Johnson, Houston City Controller. Since
falsification of a government document is a criminal
act, the matter has been referred to the Office of
the Inspector General. "We simply cannot tolerate
this type of activity in City Government," Johnson
said.
Controller's Office Auditors conducted an unannounced
inventory count and on-site interviews with Department
personnel at the Northeast Maintenance Facility located
at 5500 McCarty. This was a follow-up to a previous
audit issued in October 2001. Unfortunately, many
of the recommendations detailed in the previous report
have not been effectively implemented. In fact, the
auditors noted that conditions regarding inventory
usage have deteriorated since the 2001 review.
Management's failure to act has resulted in a lack
of security over the inventory, falsification of documents
to hide inventory discrepancies and slow moving inventory.
By allowing Operational Personnel to have after-hours
access to the site, the Department has created a situation
that is ripe for pilfering and theft. The lack of
oversight also makes it difficult to track legitimate
after-hours usage.
Another problem is the amount of inventory on hand.
The 2001 review found 48% of the commodities on hand
exceeding a one-year supply. That number had increased
to 68% in the more recent audit, or 87% of the entire
value of the McCarty inventory. The cost of acquiring
and managing excessive inventory quantities is an
unnecessary commitment of City resources and exposes
the inventory to obsolescence and possible misappropriation.
Although it is unclear if charges will be filed
in this instance, Controller Johnson believes the
City could benefit from an Administrative Policy regarding
fraud. The Controller's Office is ready and willing
to assist in drafting that policy.
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