Audit Report on the Inventory Controls of the Department of Correction over Its Food Items at the Rikers Island Storehouses

AUDIT REPORT IN BRIEF

The Department of Correction (DOC) manages 15 inmate jails (facilities), 10 of which are on Rikers Island. DOC also operates and maintains three major storehouse divisions on Rikers Island that provide the food and non-food needs of the facilities and inmates. Division II, the subject of this audit report, supplies all food items for DOC facilities. In Fiscal Year 2003, the Nutritional Services Division (NSD) of DOC purchased $16,839,916 worth of food.

This audit was commenced at the request of the Commissioner of the Department of Correction. (The Commissioner’s letter is included in Appendix I.)

DOC has inadequate controls over its inventory of dry and frozen foods maintained by Division II. Our review of DOC controls over its food inventory disclosed weaknesses in the recording and accounting of the inventories maintained at the Division II storehouses. For example, although Division II conducts monthly inventory counts, we found significant variances between the records in CBORD, the computer system used for recording the inventory and the physical inventory count conducted in September 2003; these variances were never reconciled. Additionally, we found overstocked inventory items.

The weaknesses exist, in part, because DOC has failed to establish adequate oversight and procedures for managing its food inventories. First, we found that there is insufficient communication between Division II, which stores, distributes, and monitors the food inventory, and NSD, which orders the food for the facilities. Second, the inventory records maintained by Division II are unreliable because of their data entry errors. Additionally, it is unclear whether CBORD has the functionality and capacity to handle DOC’s large food inventory. Even if CBORD were an appropriate system for this function, DOC staff are not trained in the proper use of the system and lack training in inventory control techniques.

Based on conversations with DOC officials, it appears that DOC does not have the expertise to assess the suitability of the CBORD system or to provide training for its staff. Therefore DOC should engage a specialist or consultant to assess the needs of Division II and to determine whether CBORD can meet these needs. In addition, the specialist should also be engaged to provide training for Division II staff and management personnel in the proper use of CBORD or other food management computer systems.

The report makes eight recommendations, four of which are listed below. DOC officials should:

• Seek funding to hire an outside consultant who specializes in or is familiar with inventory recording and tracking processes as well as with CBORD and other food management inventory systems and who is capable of providing training in these areas to DOC staff. The consultant should be provided with the resources to overhaul and redesign the agency’s food inventory system.
• Define and assign responsibilities for identifying, investigating, and reporting inventory discrepancies. This information should be included in DOC policy and procedure manuals that govern food maintenance.
• Provide training in inventory control techniques to management and staff; and also, train the management and staff in the proper use of the computerized inventory system to ensure that all items in inventory can be accounted for in the inventory records.
• Identify all overstocked items so that no purchases of these items are made until appropriate inventory levels had been reached.

The matters covered in this report were discussed with DOC officials during and at the conclusion of this audit. A preliminary draft report was sent to DOC officials and discussed at an exit conference held on May 24, 2004. On June 1, 2004, we submitted a draft report to DOC officials with a request for comments. We received a written response from the Commissioner of DOC on June 17, 2004. The Commissioner agreed with the audit findings and stated that DOC plans to implement seven of the eight recommendations. The Commissioner did not specifically address the recommendation (4) regarding defining and assigning responsibilities for identifying, investigating, and reporting inventory discrepancies.