Audit Report On The Inventory Controls Of The Department Of Health And Mental Hygiene Over Nicotine Replacement Therapy Aids

AUDIT REPORT IN BRIEF

The mission of the Department of Health and Mental Hygiene (DOHMH) is to protect and promote the health and mental well being of New York residents. DOHMH has programs to prevent and control chronic diseases such as heart disease, diabetes, asthma, and cancer. It has also made reducing tobacco-related illnesses a priority.

In 2002, DOHMH launched a five-point comprehensive tobacco control program comprising taxation, legislation, cessation, education, and evaluation. As part of its comprehensive plan to reduce tobacco use in New York City, DOHMH’s Bureau of Tobacco Control (BTC) distributes nicotine replacement therapy (NRT) aids such as gum, lozenges, and patches, to help smokers who are trying to quit smoking. NRT aids deliver nicotine of varying strength and help to relieve some of the withdrawal symptoms people experience when they quit smoking. This audit determined whether BTC had adequate inventory controls over nicotine replacement therapy aids.

Audit Findings and Conclusions

BTC does not have adequate inventory controls over NRT aids. BTC relies solely on a third-party vendor, Vanguard, for the monitoring and supervision of NRT inventory. BTC does not reconcile NRT inventory balances, but instead relies on Vanguard to ensure that inventory records are accurate. In addition, BTC does not monitor the physical inventory counts of NRT aids conducted by Vanguard and has never performed its own inventory count. Moreover, DOHMH has not conducted any independent audits of Vanguard’s inventory operations.

There was no evidence that inventory discrepancies identified by Vanguard were shared with BTC officials or that these discrepancies were adequately investigated. Also, we identified some discrepancies in the Employee Smoking Cessation Assistance Program (ESCAPE) inventory records maintained by BTC. Moreover, BTC officials were unaware of the process of accounting for 311 kits returned undelivered that are reshipped by Vanguard and incorrectly included them as additional kits in BTC’s calculation of the total number of NRT aids distributed during Fiscal Year 2008. Lastly, BTC lacked written policies and procedures for all the aspects of the NRT program.

Audit Recommendations

Based on our findings, we make 11 recommendations, 5 of which are listed below.

BTC officials should:

• Perform regular reconciliations of NRT inventory balances it receives from Vanguard with its own records to ensure that the inventory is being correctly accounted for.

• Assign individuals to attend and observe Vanguard’s physical inventory count of NRT aids or periodically conduct its own unannounced physical inventory counts.

• Request that DOHMH conduct independent audits of Vanguard’s operational controls and of its inventory operations.

• Ensure that Vanguard provides them with the inventory variances that are identified by physical inventory counts.

• Ensure that inventory variances are adequately investigated and that the outcomes of the investigations are adequately documented.

Agency Response

DOHMH officials generally agreed with the audit’s recommendations.

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