Procurement Department City Lacks Accountability and Control Over Computer and Other High-Tech Equipment

Audit Date: September 13, 2017
Audit Categories
  • Performance
Controller: Alan Butkovitz
Audit Tags
  • Inventory,
  • Procurement


Lack of Accountability with Computers & High-Tech Equipment

Executive Summary

Why The Controller’s Office Conducted The Audit

Concerned about the risk of poor oversight with respect to computer and other high-tech equipment acquired by City of Philadelphia (City) departments, pursuant to Section 6-400(d) of the Home Rule Charter, the Office of the Controller (Controller’s Office) conducted a performance audit of the City’s personal property inventory system. The objective of this audit was to determine whether City departments were effectively accounting for such inventory and whether they had designed and implemented controls to safeguard it against loss or misappropriation.

What The Controller’s Office Found

The City does not have an effective system in place to maintain accountability over its computer and other high-tech equipment. Our testing revealed that only 47% of the assets we sampled from the C400 database could actually be located in the specified City department. Moreover, the database contained a significant number of computer and other high-tech assets that are classified as “cannot locate” (CNL), some of which have remained in the database for years, even dating as far back as 1989.

Our assessment of the C400 database suggests that the problems mainly occurred because (1) procedures to ensure that City departments internally and uniformly account for personal property have not been updated, (2) the Procurement Department does not maintain adequate control over sequentially numbered inventory identification tags, (3) City departments often did not conduct physical inventory without prompting by the Procurement Department, and (4) despite repeated attempts to have CNL items removed from the inventory database, there is confusion among the departments as to the proper procedures to follow. As a result, departments’ ability to determine the need to acquire computer and other high-tech equipment may be impaired, departments cannot provide assurance that equipment is protected from loss or being used only as authorized, and valuable equipment could be easily misappropriated.

What The Controller’s Office Recommends

The Controller’s Office has developed a number of recommendations to address the above findings. Some of the more significant include: (1) establishing a uniform recordkeeping system for departments to track and maintain their internal inventory information, (2) maintaining better control over sequentially numbered inventory tags, (3) performing annual inventory counts in accordance with standard accounting procedures, and (4) ensuring that CNL items are properly and promptly removed from the City’s C400 database after three years.