Audit Report on the Inventory Controls of North Central Bronx Hospital over Noncontrolled Drugs

The objective of this audit was to determine whether the internal controls over North Central Bronx Hospital’s (NCB) inventory of noncontrolled drugs (drugs) were adequate. The New York City Health and Hospitals Corporation (HHC) provides comprehensive medical, mental health, and substance abuse services through its 11 acute-care hospitals, 6 diagnostic and treatment centers, 4 nursing facilities, and more than 80 community-based clinics.

During Fiscal Year 2009, the total cost of drugs (controlled and noncontrolled) purchased by the Pharmacy Department at NCB was approximately $2.1 million. According to the “Physical Inventory Evaluation” report (Exhibit H) that NCB prepared and submitted to HHC, the value of the inventory of all drugs in the Pharmacy Department stockroom at the end of Fiscal Year 2009 was $309,806.

Audit Findings and Conclusions

Overall, NCB’s Pharmacy Department has adequate inventory controls over noncontrolled drugs. Based on our testing and observations, we found no inaccuracies in the inventory records. We also found that access to the Inpatient Pharmacy, stockroom, and Out-Patient Pharmacy (OPD) is restricted to specific employees, and cameras are installed in Pharmacy areas to observe their activities. Documentation for drugs that were issued from the stockroom is maintained in the Pharmacy Department files, and adjustments made to Other Than Personal Service procurement management system (OTPS) have supporting documentation.

Nevertheless, we identified some control weaknesses. The Pharmacy Department did not adequately segregate the duties of the stockroom employees: one employee was responsible for all the duties relating to receiving the drugs, maintaining the drugs, issuing the drugs, and updating the drug inventory records on OTPS. In addition, Pharmacy officials did not track the expired drugs kept in the stockroom prior to their being picked up to either return to manufacturers or destroy. Pharmacy officials also did not reconcile the dollar value of the returned expired drugs to the credits and checks the Pharmacy Department receives from the vendors. Some of the weaknesses we noted were addressed by the Pharmacy Department during the course of this audit.

Audit Recommendations

Based on our findings, we make six recommendations, three of which are listed below. NCB Pharmacy officials should:

• Ensure that the stockroom personnel have read-only access to the inventory information in the computer system.

• Perform reconciliations to ensure that the NCB is receiving the correct amount of credits and monies for the expired drugs that have been returned to vendors.

• Maintain a record of the expired drugs kept in the stock room awaiting pick-up.

In their response, HHC officials stated that they agreed with and have implemented all of the audit’s recommendations.