DRUG ENFORCEMENT ADMINISTRATION
PROPERTY MANAGEMENT AND INVENTORY CONTROLS
The Office of the Inspector General (OIG), Audit Division, has completed an audit of personal property management within the Drug Enforcement Administration (DEA) at both the headquarters and domestic field levels. At the time of our audit, DEA estimated that their property inventory consisted of about 111,000 items with an approximate value [ This is the acquisition cost of purchased items or the fair market value of forfeited property.] of $290 million. However, in our judgment, DEA's official property records were materially incorrect.
Personal property management in DEA is segregated into seven separate property management inventory systems. These systems are organized by property type and utilization, and each is operated and managed independently. Inventory systems for administrative property, aircraft, badges and credentials, firearms, motor vehicles, technical equipment, and vessels were reviewed during the audit. [ Based on our survey work and a previous OIG audit, we performed detailed testing of inventory systems for administrative property, badges and credentials, firearms, technical equipment, and vessels. Aircraft were reviewed in detail in OIG Report Number 95-29, Drug Enforcement Administration Management of Aviation Operations. Our survey work on motor vehicles identified minor errors, and as a result we excluded this area from detailed testing.]
The audit concentrated on, but was not limited to, the current inventory at the time of testing. Additionally, testing of related accounting records focused on the period April 1, 1994 through March 31, 1995. Our audit scope, methodology, and additional background information appears in Appendix I.
The significant findings of the audit are as follows:
DEA did not have a comprehensive, reliable property management program. Instead, the agency had seven different and fragmented systems that sometimes overlapped and were often unreliable and cumbersome. Field personnel also created their own property systems because of perceived or actual needs.
Property was not always recorded or not recorded accurately in the property records. We noted from a sample of 3,699 property items that 464 items (12.5%) were physically located but were not recorded in one of the property systems; 473 items (12.8%) were recorded with an incorrect serial number, location, custodian, or DEA identifier; and 56 items (1.5%) could not be located and produced for our physical inspection during the audit. We did not note any errors with the remaining 2,706 items (73.2%) tested.
DEA has not designated a Property Management Officer (PMO) with overall property management responsibility. The current PMO has complete authority over only two types of DEA property. The PMO also has authority over firearm disposals. Without broad authority, the PMO cannot administer, coordinate, and control the property management program within DEA.
Physical inventory practices were not adequate. Also, we identified idle property with an acquisition value of over $217,000.
The duties of controlling both the physical property and records for badges and credentials were not adequately separated. Moreover, 16 unissued badges were missing from stock and could not be located.
DEA's accounting records for personal property were inaccurate and unreliable, resulting in a materially misstated fixed asset balance in the aggregate of at least $85 million. The fixed asset balance was erroneous due in part to: (1) capitalization errors; (2) the omission of non-purchased assets; and (3) the failure to deduct disposed assets.
Prior to our audit, DEA officials had acknowledged the need for a comprehensive property management program. A study team was formed in 1993 of Office of Administration personnel, including the PMO, to conduct a review of the seven property systems. Furthermore, DEA expressed the need for an integrated system to the Assistant Attorney General for Administration in January 1994. As a result, the Justice Management Division (JMD) was conducting a feasibility study for the development of a new personal property management system for DOJ components.
In addition, DEA's Accounting Section began taking corrective action to adjust the fixed asset balances, prompted by the impending requirement for audited financial statements.
The purpose of this audit was to examine the Drug Enforcement Administration (DEA) personal property management program at both the headquarters and domestic field levels. The results of this review are particularly significant since DEA will be required to submit audited financial statements for Fiscal Year 1996. Accurate accounting information and supporting property records are essential to the achievement of this requirement.
The objectives of the audit were to determine: (1) the adequacy of internal controls for maintaining and safeguarding property, as well as the accuracy and reliability of DEA's property management records; and (2) the accuracy of DEA's general ledger concerning fixed assets.
DEA Property Management Systems
DEA does not maintain a centralized property management program. Rather, there are seven separate inventory systems, each managed differently and distinguished by the type and use of property. According to a senior DEA official, within these systems there are multiple funding authorities and purchasing responsibilities. At the time of our audit, DEA estimated their total inventory count to be about 111,000 items with an approximate value of $290 million. DEA estimates of the type, number, and value of property are detailed in the following table.
|DEA ESTIMATED UNIVERSE OF PROPERTY NATIONWIDE|
|PROPERTY SYSTEM||NUMBER OF ITEMS||PERCENT OF ITEMS||DOLLAR VALUE||PERCENT OF VALUE|
|ADMINISTRATIVE PROPERTY||37,764||34%||$ 61,948,027||21%|
[ The aircraft inventory number of items was less than 1 percent.]
|BADGES AND CREDENTIALS [ No dollar values for badges and credentials are included. This type of accountable property is tracked for security reasons, not based upon monetary value.]||4,336||4||N/A||N/A|
[ The vessel inventory number of items was less than 1 percent.]
[ The percentages do not total 100 percent due to rounding.]
The Property Management Unit of DEA was responsible, in whole or in part, for the official inventory records of four property systems.
Administrative Property - Administrative property was the second largest category of personal property and consisted of computers, office and laboratory equipment, furniture, and other property used in daily operations. The inventory records were maintained in an automated database that contained records of administrative equipment over $100, furniture over $1,000, as well as forfeited property (excluding vehicles and other conveyances) placed into official use.
Administrative property was managed and controlled by the property manager in DEA Headquarters. Additionally, an administrative person in each division, district, and resident office was responsible for managing, controlling, and accounting for property assigned to that office.
Aircraft - Aircraft consisted of all fixed wing aircraft and helicopters within DEA. Aircraft inventory records were maintained by the Property Management Unit and the Air Wing. The official records kept by the Property Management Unit were manual and contained mainly acquisition and disposal information. The Air Wing records were maintained in a stand alone computer and described location and usage.
Motor Vehicles - These inventory records included all motor vehicles placed into official government use, including cars, trucks, motorcycles, and other special purpose vehicles.
Vessels - The vessel inventory system consisted of all water based conveyances operated by DEA. In addition to the Property Management Unit, vessel inventory records were also maintained by the Technical Operations Section, Marine Program. The official records kept by the Property Management Unit were manual and contained mainly acquisition and disposal information. The Marine Program records included location and utilization information.
Each division office assigned a vessel designated a special agent who was responsible for the vessel and its related inventory.
The following three property systems were maintained and controlled outside the Property Management Unit.
Badges and Credentials - The badges and credentials inventory records were managed by the Office of Security Programs. The records were maintained on an automated system which included badges issued to special agents and credentials issued to DEA employees and task force members. Task force members included law enforcement personnel from state and local units of government who were temporarily assigned to DEA.
Firearms - The firearms inventory records were administered by the Office of Training, Firearms Training Unit. The automated database used for firearms included information concerning all firearms assigned to DEA special agents and weapons kept in stock.
Each division office designated a special agent who was responsible for maintaining the inventory records of all firearms in the division.
Technical Equipment - Accountable technical equipment was the largest category of personal property and was defined as property used for investigative purposes with a purchase price of $100 or more. Included in this category was surveillance equipment, communications equipment, and communications security equipment. This category included forfeited technical equipment items placed into official use.
The inventory records of technical equipment were managed by the Office of Science and Technology, Technical Operations Section and maintained in the Technical Equipment Inventory System (TEIS), an automated system. Each division, district, and resident office assigned either an inventory specialist or special agent to manage the local technical inventory. Most of the district and all the resident and post of duty offices lacked a TEIS terminal, precluding access to the automated records. As a result, property custodians at these locations had devised their own record keeping systems.
DEA's Fixed Asset Accounts
DEA was supposed to record capitalized property in the general ledger fixed asset account. Capitalized property was defined as having an acquisition cost in excess of $5,000 and a useful life over 2 years. As of March 31, 1995, the fixed asset balance on DEA's general ledger totalled approximately $271 million.
DEA's Financial Statements
The Government Management Reform Act of 1994 requires the submission of government wide audited financial statements beginning with the financial statements filed for Fiscal Year 1996. DEA will be a material component in the Department of Justice's (DOJ) effort. These statements must be supported by complete and accurate property records.
FINDINGS AND RECOMMENDATIONS
I. REVIEW OF DEA PROPERTY MANAGEMENT PRACTICES
DEA did not have a comprehensive property management program. Instead, the agency had a fragmented program, with seven systems that were often unreliable and cumbersome. DEA needs a functional and effective property management program that is easy to use, accessible to those who need it, and capable of providing management with accurate and reliable property information.
The present independent systems were designed at different times to meet the different needs of different users. However, there is still a need for compatibility among the systems to benefit all users. Each system had its own administration, management, and record keeping system. The fragmented property management systems resulted in: (1) a lack of overall management; (2) property that was difficult to locate and value; (3) inaccurate property records; and (4) duplicate property records.
A. Internal Controls
The Office of Management and Budget (OMB) Circular A-123, Revised, states the objectives of internal control systems are to provide management with reasonable assurance that:
assets are safeguarded against waste, loss, unauthorized use, and misappropriation;
revenues and expenditures are recorded and accounted for properly; and
accountability of the assets is maintained.
Our review of internal controls during the audit consisted of observations, interviews of property managers and custodians, and tests of internal controls in headquarters and field locations. For purposes of property management and control, DEA's internal controls over personal property generally did not meet the stated objectives of an adequate internal control system. For example, we noted the following types of internal control weaknesses:
there was a lack of assurance that all property received was entered into the property records;
there was a lack of assurance that all property was entered accurately and completely in the property records;
critical property management functions in the badges and credentials inventory system were not adequately segregated; and
physical inventory practices were not adequate.
These weaknesses in the internal control system, which will be discussed in detail in Section C, impaired DEA's ability to ensure that property records were accurate and complete, assets were safeguarded and accounted for, and financial records were supported. If DEA established a Property Management Officer with overall authority and responsibility, internal control problems could be minimized.
B. The Property Management Officer
Property management within DOJ was regulated by the Justice Property Management Regulations (JPMR). These regulations require each agency to appoint a Property Management Officer (PMO) ". . . responsible for the overall administration, coordination, and control of the personal property management program of the bureau." Further, the JPMR states that "Only one PMO is to be designated for the bureau, at the bureau level. Neither the title designation nor the responsibilities of the PMO are to be delegated below that level."
The PMO has the following functions as required by the JPMR:
coordinating and conducting the activities of the personal property management program;
providing leadership, guidance, and operating procedures for property management; and
ensuring general ledger property accounts are supported by the property records.
DEA has appointed the Chief of the Property Management Unit as the PMO. However, this unit has complete responsibility for two of seven systems, administrative property and motor vehicles. Additionally, the official inventory records for vessels and aircraft are maintained within the unit; however, the PMO does not manage the activities of these systems. The PMO has limited responsibilities pertaining to technical equipment (the largest personal property system) and firearms, and none for badges and credentials.
The PMO, without overall property management responsibility, lacks the authority to perform the duties of administering, coordinating, and controlling the property management program within DEA. As a result, DEA cannot ensure the accuracy of the records and the reliability of its personal property program.
C. Review of Property Systems
To assess the accuracy and reliability of DEA's property systems, we performed tests of internal controls and the inventory records, and physically verified a sample of assets. The universe of the sites reviewed, our sample size, and our results appear in the following table.
|RESULTS OF SYSTEM TESTING FOR SITES REVIEWED|
[ We classified as an "exception" property which was: (1) on site but not recorded in the official inventory; (2) on the official inventory but not located; and (3) recorded on the official inventory list with either an incorrect serial number, DEA property number, location code, or custodian. The specific number and types of exceptions are discussed on the following pages.]
|NO. OF ITEMS||DOLLAR AMOUNT||NO. OF ITEMS||DOLLAR AMOUNT||NO.
[ Based on our survey work and a previous OIG audit, we performed detailed testing of inventory systems for administrative property, badges and credentials, firearms, technical equipment, and vessels. Aircraft were reviewed in detail in OIG Report Number 95-29, Drug Enforcement Administration Management of Aviation Operations. Our survey work on motor vehicles identified minor errors, and as a result we excluded this area from detailed testing.]
|BADGES AND CREDENTIALS [ No dollar values for badges and credentials are included. This type of accountable property is tracked for security reasons, not based upon monetary value.]||1,824||N/A||883||N/A||341||N/A|
|MOTOR VEHICLES [ Based on our survey work and a previous OIG audit, we performed detailed testing of inventory systems for administrative property, badges and credentials, firearms, technical equipment, and vessels. Aircraft were reviewed in detail in OIG Report Number 95-29, Drug Enforcement Administration Management of Aviation Operations. Our survey work on motor vehicles identified minor errors, and as a result we excluded this area from detailed testing.]||272||4,309,749||59||903,803||3||57,050|
[ Dollar amounts for the technical equipment universe and sample were severely understated due to missing values in the database. This is discussed later in this finding under the subheading Technical Equipment Property Values.]
These tests identified several areas of DEA's personal property management program which need improvement:
technical equipment property values;
record keeping practices;
supplemental property systems;
physical inventory procedures;
frequency of physical inventories;
property management guidance;
idle property; and
control over badges and credentials.
The records from the separate property systems within DEA were cumbersome and often unreliable. Inaccuracies in the property records can impair system managers' ability to effectively and efficiently manage the inventory.
The most significant inaccuracies were found in the administrative property, badges and credentials, firearms, and technical equipment systems as identified in the following table. Aircraft and motor vehicles were not included in the table because we excluded them from detailed testing. In addition, vessels were not included in the following table because no exceptions were noted during the audit testing phase.
|PROPERTY TEST RESULTS FOR SITES REVIEWED|
|PROPERTY SYSTEM||NO. SAMPLED||NOT RECORDED||RECORDED, BUT NOT LOCATED||NOT RECORDED CORRECTLY
[ These included either an incorrect serial number, DEA property number, location code, or custodian.]
|NO. OF ITEMS||DOLLAR AMOUNT||NO. OF ITEMS||DOLLAR AMOUNT||NO. OF ITEMS||DOLLAR AMOUNT|
|ADMINISTRATIVE PROPERTY||924||283||$532,892||23||$ 99,756||57||$1,018,608|
|BADGES AND CREDENTIALS [ No dollar values for badges and credentials are included. This type of accountable property is tracked for security reasons, not based upon monetary value.]||883||5||N/A||16||N/A||320||N/A|
Property was not always recorded or not recorded accurately in the property records. We noted a total of 993 exceptions (26.8%) from a sample of 3,699 property items tested. We did not note any errors in the remaining 2,706 items (73.2%) tested.
Not Recorded. There were 464 pieces of property that were located in DEA offices but were not accounted for in the property records. The absence of these items from the official property records made them susceptible to waste and theft.
One office had received shipments of 229 pieces of computer equipment valued at $262,518 that had not been entered into the database. At the time of our review, this equipment had been in the office for at least 5 months.
Nationwide, 22 of 26 polygraph machines, with a unit cost between $5,800 and $18,500, were not recorded in any property management system. The polygraph coordinator stated that field personnel had been previously instructed to ensure that the equipment had been recorded in the property records.
Recorded, But Not Located. There were 56 listed items, with an estimated acquisition value of $120,390, that were physically unaccounted for. They included: handguns, televisions, video and audio recorders, surveillance equipment, and a $62,887 firearms training system. One reason given for some of the unaccounted for technical equipment and administrative property was that the item had been moved to another DEA location. Another explanation provided was that the item had been disposed of; however, there was no documentation to show the disposition.
Concerning the three handguns which were not located, two were identified as weapons which were to be destroyed; however, there were no destruction documents. According to the DEA firearms custodian, the third handgun was assigned to a special agent who was sent out of the country and the handgun was stored in the agent's personal safe deposit box in another city.
The 56 items not located also included 16 badges listed as in stock that were physically unaccounted for. No physical inventories had been performed of badge supply stock; therefore, DEA could not provide an explanation for the absence of these badges.
Not Recorded Correctly. A total of 473 property records had either an incorrect serial number, location, custodian, or inventory control number. These inaccuracies made it difficult to locate and identify specific pieces of property. As a result, DEA could not obtain accurate information regarding property on hand in a specific location, and property records could not be used to forecast operational needs.
In the course of our audit, we identified causes for some of the inaccuracies in the administrative property inventory records.
There was no internal control process to ensure that administrative property received in DEA Headquarters was entered into the database. There was no link between the property ordering, receiving, and recording activities. Consequently, property could be received and put into use, but not accounted for in the inventory system. The administrative property manager stated that DEA was in the process of implementing an electronic property record which should help ensure that all administrative property ordered was received and recorded in the inventory database.
Some equipment, particularly in the laboratories, consisted of several components linked together. This comprehensive unit would have one inventory control number. However, the administrative property database could not record the serial numbers of the individual components under the single inventory control number. This weakness, found in four locations, precluded adequate control of component parts and produced incomplete inventory records.
Physical inventory procedures were inadequate, preventing identification of errors in the property records. These issues are discussed later in this finding.
Technical Equipment Property Values
The Technical Equipment Inventory System (TEIS) database, was established approximately 2 years ago at a cost of over $1 million, according to DEA officials. It was intended to improve the inventory management of technical equipment; specifically utilization, movement, and maintenance.
DEA estimated their technical equipment inventory at $99 million. We tested the TEIS records and concluded that they did not support DEA's estimates. In fact, the records in this system were incomplete, as 72 percent of the entries lacked a dollar value.
|INVENTORY VALUES IN TEIS FOR 19 DEA DIVISIONS|
|VALUE OF ITEMS LISTED WITH DOLLAR VALUES||$41,024,981|
|TOTAL NUMBER OF ITEMS IN INVENTORY||48,501 (100%)|
|NUMBER OF ITEMS LISTED WITH DOLLAR VALUES||13,365 (28%)|
|NUMBER OF ITEMS LISTED WITHOUT DOLLAR VALUES||35,136 (72%)|
As shown above, the property records of technical equipment significantly understated the aggregate value of inventory. We were unable to assign values because the items with dollar amounts listed were not representative of the entire inventory. Headquarters personnel provided several explanations as to why the values were missing. Most significantly, the value field in TEIS was not mandatory. Therefore, property was entered without cost data. In our judgment, without complete cost information, planning and budgeting for future technical equipment needs becomes difficult and inaccurate.
In addition, in Fiscal Year 1996, DEA will be required to submit audited financial statements to the Department. The property records are required to support the general ledger property accounts. It would be difficult to support the general ledger without values assigned to the technical property.
Record Keeping Practices
Due to the fragmentation of the property management systems, we noted the same property items on multiple property lists. This resulted in duplicate record keeping and duplication of efforts when performing physical inventories. This duplication occurred because the property program was not coordinated by the PMO and the various databases could not be reconciled.
The technical equipment and administrative property systems overlapped because some types of equipment could be classified as either administrative property or technical equipment. This overlap could cause notable problems while conducting physical inventories. As the physical inventories of these types of property were not performed simultaneously, DEA could not ensure that all accountable items were inventoried. This situation was best represented by the universe of computer and facsimile (fax) equipment in DEA.
Computer equipment could be recorded in two separate inventory systems, administrative property and technical equipment. Therefore, in order to determine how much and what type of computer equipment existed, two databases had to be queried. As these databases cannot easily produce a report by type of property, this type of search would have been labor intensive and prone to error. Additionally, as the technical equipment database did not contain complete cost data, a comprehensive value of computer equipment on hand could not be obtained from these records.
We also identified errors in recording fax machines in the property systems. The universe of the 5 division offices we reviewed included 109 fax machines. There were errors with 28 percent of these machines. Twelve of the 109 fax machines were listed in one of the property systems, but could not be located. A total of 11 fax machines were on hand, but were not recorded in any property management system. Additionally, eight of the fax machines were recorded in both the technical equipment and administrative property databases. Therefore, we concluded that inventories were not properly performed and reconciled.
All forfeited property placed into official use by DEA (except for motor vehicles and other conveyances) were required to be recorded in the administrative property inventory system. However, forfeited items which were used for technical purposes were also recorded in the Technical Equipment Inventory System (TEIS). This resulted in duplicate record keeping.
Further, inventory records for aircraft and vessels were maintained by two different groups within DEA. The Property Management Unit maintained the official inventory records for both aircraft and vessels. These records consisted mainly of acquisition and disposal information. The detailed inventory records including usage, location, and accountability were maintained separately by the DEA Air Wing and the DEA Marine Program.
Similarly, the badges and credentials automated system allowed duplicate names and numbers and incomplete records to be entered.
The database allowed employees to have multiple badges and credentials assigned to them. When a badge or credential was lost, stolen, or otherwise rendered void, the record should have been reclassified from active to inactive. However, DEA did not always follow this procedure. Our review identified 49 credentials and 18 badges which were incorrectly classified as active.
The same credential number had been issued to two separate individuals. This was possible because the blank credential stock was not pre-numbered. The database was not designed to indicate that this error had occurred.
Many records contained first initials, rather than first names, causing confusion because of similar names. This made it difficult to determine the correct badge and/or credential issued to an individual.
Numerous records did not contain social security numbers. This identifier proved to be important for two reasons: (1) distinguishing between individuals with common names; and (2) tracking the location of employees. The database was linked to the Personnel Locator System which updated employee locations based upon social security numbers. Without social security numbers, the system could not generate current locations of employees, their badges, and credentials.
Issue dates were often missing from the records within the system. Therefore, a report of outdated credentials could not be prepared by the automated system. According to DEA management, special agent credentials should be updated every 5 years in order to keep the photograph current. Our review identified 39 special agent credentials over 5 years old.
In conclusion, property records were not collected in a central point, or in a standardized format, to facilitate coordination of the data. Further, the databases could not be easily reconciled. The current practices resulted in incomplete records and allowed items to be: (1) omitted; (2) recorded twice; and (3) recorded without cost data. As a result, DEA could not assemble aggregate, accurate property counts or use the current property records as an effective management tool to plan purchases, transfers, or disposals.
Supplemental Property Systems
The automated systems used for inventory management of administrative property and firearms did not completely address the needs of field personnel. Additionally, the technical equipment system was relatively new, complex, and accessible only by personnel in the division and select district offices. As a result, field level property custodians created supplemental inventory management systems.
In one of the five division offices reviewed, a property custodian maintained an independent database of all computer equipment in the division because these items were frequently moved. The database contained records for 1,450 pieces of equipment valued at $1,038,894. The employee responsible for computer equipment in this office used this supplemental system, not the Headquarters system, to manage the inventory. Therefore, the official records were not current. During our review, we observed 15 pieces of computer equipment that were not listed on the official listing. However, these items were traced to the supplemental inventory listing. The administrative property manager in Headquarters was unaware of this practice and expressed concern.
In three of the five divisions reviewed, the firearms custodian had created a supplemental property management system to track weapons. The reasons stated for this included: (1) lack of confidence in the Headquarters based system; and (2) the lack of space to store data concerning firearms training.
In four of the five division offices reviewed, technical equipment inventory custodians created supplemental systems to track property. In one location, the custodian stated he had not received sufficient training on the Technical Equipment Inventory System (TEIS) and could not use it to its full capacity. In another location, the system was created because the operators lacked confidence in the Headquarters based system, which had been operating for about 2 years.
TEIS terminals are located in the Technical Operations Section, the division offices, and select district offices. Consequently, technical personnel in all other offices were not able to access the system. They had to rely upon their own resources to create an individual record keeping system. Therefore, information maintained in TEIS was not current nor complete, as it could not reflect the utilization of items located in offices without terminals.
The existence of these supplemental systems represented a waste of resources, since field personnel were maintaining duplicate records. The fact that these individuals were making duplicate entries regarding property receipt, issuance, return, transfer, and disposal in two different systems compromised the reliability of the official systems. Unfortunately, from our perspective, these systems were necessary because they were more reliable, accurate, and easier to use than the Headquarters based systems.
Physical Inventory Procedures
We noted a lack of internal controls at several locations reviewed concerning segregation of duties when physical inventories were performed. In the field offices, the physical inventories were often performed by the primary inventory custodian, who also had responsibility to maintain the property records. As a result, one person was in a position to manipulate property and the supporting records.
In three locations, the physical inventories of administrative property were conducted by the primary administrative property custodian who also maintained the property records. DEA regulations stated that an employee other than the primary inventory custodian must perform the physical inventory.
In three locations, the physical inventories of firearms were conducted solely by the primary firearms custodian. DEA regulations specifically stated that this individual must be accompanied by an independent employee during the performance of physical inventories.
In nine locations, the physical inventories of technical equipment were conducted by the primary technical equipment custodian who also maintained the property records. Therefore, there was not an adequate separation of duties in the inventory process.
Furthermore, the physical inventory practices in many locations were inadequate because both the DEA assigned identifier and serial number were not verified.
Administrative property custodians in two locations stated that when physical inventories were performed, only one identifier was verified. Physical inventory procedures, as stated in the DEA Administrative Manual, required that physical inventory reconciliation include verification of all information on the inventory printout.
Technical equipment custodians in smaller offices without TEIS terminals could not verify the DEA identifier and the serial number. These offices had not been issued the necessary scanner to read the DEA identifier located on a bar-code sticker. Therefore, these offices could only trace the equipment using the serial number.
Frequency of Physical Inventories
Due to the segregation of the seven different property systems, the requirements for physical inventories differed greatly. For example, according to DEA regulations administrative property was required to be inventoried every two years and firearms every year. These inventories were performed as specified. As there were just 17 vessels, regularly scheduled inventories were not necessary.
However, for technical equipment, there were no written guidelines requiring the field personnel to perform physical inventories. In October 1994, the Office of Science and Technology, Technical Operations Section (STT) requested the division offices to perform a physical inventory of technical equipment. However, STT failed to adequately follow-up on this request. At the time of our review, STT personnel were unsure of how many divisions had performed the inventory. In fact, two of the locations we audited had not yet completed the necessary inventory. Recently, DEA sent a memorandum to the division offices requesting the results of the inventory.
Finally, during our review, Office of Security Programs personnel stated that complete physical inventories had not been performed of badges and credentials. As a result, we found the property listings to be inaccurate and unreliable. Office of Security Programs personnel were in the process of reviewing and correcting the data.
Property Management Guidance
Property management guidance to field offices was limited concerning technical equipment. This was due in part to the fact that STT did not have personnel knowledgeable in property management fundamentals and regulations. The problem was further exacerbated because DEA did not have an overall PMO, who has the duty to provide guidance for property management.
In addition, property custodians for technical equipment in field locations were often not trained in property management regulations and fundamentals, such as inventory techniques and internal controls. In smaller offices, technical equipment was managed by special agents as a collateral duty to their regular law enforcement responsibilities. Therefore, according to DEA officials, some of these individuals did not have the background for property administration, which hampered their ability to appropriately manage their inventory.
STT had a Technical Operations Handbook which should have included guidance on inventory management. The most recent version of the Handbook was dated 1989, preceding the implementation of TEIS. This 1989 edition had limited information on inventory management and no information on TEIS.
Idle property was identified in three of five division offices reviewed. In one location, two items, valued at a total of $17,330, were in storage and were not used. Additionally, money counters in two locations were idle. These machines were purchased at approximately $100,000 each. The money counters were not extensively used because they "ate" the money and were difficult to operate. However, DEA personnel stated that when the machines were in working order, they improved efficiency and without them much time was spent performing this work manually.
The situation concerning the money counters provided some insight into the myriad of property management problems. We were informed five money counters were purchased at a total cost of approximately $500,000 in 1989. As noted above, we found two idle machines which had been in storage for an extended period of time. We were shown documentation showing the existence of another two machines, but they were not on any inventory list. After completion of our field work, DEA added one of these machines to the administrative property system. DEA stated the fifth machine was sent to Los Angeles in 1989, but neither we nor DEA were able to locate it during our review.
Control Over Badges and Credentials
The management system for badges and credentials lacked separation of duties in critical property management responsibilities. One employee had almost complete responsibility over badges and credentials, including:
receiving and maintaining badges and unnumbered credentials supply stock;
creating credentials (including assigning numbers);
issuing badges and credentials;
entering data into the automated system;
maintaining manual records; and
making changes to the automated and manual records.
These duties were performed autonomously without independent verification, allowing errors to be made and not identified. This lack of control exposes DEA to fraud and abuse concerning their credentials and badges. In fact, we noted several instances of serious control problems. These included 16 badges unaccounted for and 2 separate individuals with the same credential number.
D. DEA Actions
DEA officials had acknowledged the need for a comprehensive property management program. A study team formed in 1993 of Office of Administration personnel, including the PMO, conducted a review of the seven systems and ". . . concluded that a total change to the accountability and inventory process is necessary." DEA's Deputy Assistant Administrator for the Office of Administration stated that the method to change the inventory process and bring DEA into compliance with property regulations "would be to develop a DEA Master Inventory System that would interface with a new Financial Management System."
Furthermore, DEA expressed the need for an integrated system to the Assistant Attorney General for Administration in January 1994. As a result, the Justice Management Division (JMD) was conducting a feasibility study for the development of a new personal property management system for DOJ components.
This effort was still in process and a working group was established to identify the various needs of the components and explore possible solutions. DEA was participating in the working group and was planning to adopt the resulting system. JMD officials stated that the system designed will be consistent with the Justice Property Management Regulations (JPMR). Therefore, DEA can begin corrective action immediately, as long as such action is consistent with the JPMR.
DEA has seven separate property systems, each with its own manager and database. There is no PMO responsible for the overall coordination of the various systems. The fragmentation of the program, along with inherent deficiencies within each system, was illustrated by the following:
property was not adequately safeguarded against waste or theft;
property record totals were not a reliable indicator concerning: (1) the true acquisition value of DEA's assets, and (2) total property on hand; and
resources were wasted because of duplication of efforts and records.
To its credit, DEA realized many of these problems and has taken the initiative within the Department to seek corrective action.
F. Recommendation and Status of Corrective Actions
We recommend that the Administrator, DEA:
1. Establish a comprehensive personal property management program which is adequately administered, controlled, and coordinated by a single property management officer. This program should include a system of adequate, standardized internal controls and reliable inventory records.
Resolved. DEA concurred with this recommendation subject to the availability of adequate monetary and manpower resources. DOJ is developing a new, standardized property management system, which interacts with the general ledger, for use by all DOJ components. This system will have adequate, standardized internal controls and reliable inventory records.
In addition, DEA concurred that this program should be administered, controlled, and coordinated by a single property management officer.
We understand that much of this is dependent on the actions of DOJ. However, there is action that DEA can take in the interim. To close this recommendation, please provide us with your plan for: 1) improving the reliability of the inventory records, and 2) establishing a single property management officer who will have the authority to administer, control, and coordinate the property management program. We also request a timeline for the implementation of these actions.