Follow-up Audit Report on Department of Homeless Services Controls Over Computer Equipment

AUDIT REPORT IN BRIEF

This follow-up audit determined whether the Department of Homeless Services (DHS) implemented the three recommendations made in the previous audit entitled Audit Report on Controls of the Department of Homeless Services over Its Computer Equipment (Audit No.FL03-131A, issued June 30, 2003). In this report, we discuss the three recommendations from the prior audit in detail as well as the implementation status of each recommendation.

Audit Findings and Conclusions

The earlier audit reviewed the controls that DHS maintained over its computer equipment and determined whether this equipment was properly safeguarded from theft, damage, and unauthorized use. That audit found that DHS had widespread problems with its inventory controls over computer equipment. As a result of its poor inventory management and control practices, $1,841,015 in computer equipment purchased during the audit period was not listed on DHS inventory records. Moreover, DHS could not account for approximately $1,640,180 of the $1,841,015 in computer equipment purchases. At the conclusion of that audit, DHS stated in its response, that it had accounted for all but 325 items with a value of $333,003.

This follow-up audit found that of the three recommendations made in the previous audit report, DHS has implemented two. We consider the third recommendation only partially implemented. Although DHS has developed a set of inventory policies and procedures, major weaknesses still exist in DHS inventory-management process. Moreover, the inventory management procedures do not fully address Department of Investigation (DOI) inventory standards.

On August 7, 2002, DHS purchased the Lockwood Asset Management Life Cycle Software Application Suite, Large Enterprise Edition (Asset Management Technology (AMT)), a turnkey software package, to automate the computer inventory process. This software became operational on March 2003. During the current audit, we reviewed and analyzed how this application affected the process and found that there were significant delays in updating and maintaining current inventory records in Asset Tracker (a module in AMT; that the data is incomplete; and that the application is not being used to its fullest capacity. Finally, DHS has not consistently followed its inventory management and control procedures over computer equipment.

Audit Recommendations

We make a total of nine recommendations to DHS.

To address the issues from the previous audit that still exist, we recommend that DHS officials:

• Update DHS procedures to ensure that these procedures comport with DOI Inventory Standards.

To address the new issues noted in this follow-up audit report, we recommend that DHS officials:

• Improve the DHS inventory process by fully utilizing all the capabilities available in AMT, such as tracking back orders and identifying reorder points in advance. Further, DHS should include in Asset Tracker all acquisition dates, the value of each item of inventory, and the movement of inventory items.

• Create a procedure that will allow data from the City’s Financial Management System (FMS) to be utilized by AMT.

• Maintain the storage areas and physically organize the assets, thereby making it easier to keep the storage areas usable and safe.

• Place asset tags on assets and the boxes that maintain the assets.

• Replace faded asset tags after a specific period of time to enable easy identification of the asset.

• Conduct weekly meetings with the Gatekeepers, Inventory Administrator, and all responsible employees to obtain feedback on problems and request suggestions for improving the inventory process.

• Contact the Department of Citywide Administrative Services and request the disposal of surplus DHS equipment.
• Incorporate AMT into the DHS disaster recovery plan.