ACCOUNTING, THEFT WOES
The city of Atlanta, mainly through its city auditor, has recently pinpointed both accounting and security struggles across several agencies. Collectively, the audits have cited unaccounted millions in local and federal spending.
Missing materials. A city audit released this month determines the Atlanta Department of Public Works can't account for at least $2.2 million in materials, lacks critical inventory management controls and is vulnerable to undetected theft.
Missing equipment. The city announced it fired 13 Watershed Management employees following an investigation into theft and mismanagement. An internal investigation of the city's water department was prompted by several reports of missing or stolen items, which include 28, 700-pound industrial water meters worth $5,210 apiece, copper, pipes and more. A backhoe worth about $80,000 has also gone missing in recent months, but has not yet been reported stolen to police.
No oversight. The head of Atlanta's jobs agency retired in May after an Atlanta Journal-Constitution investigation found her agency recklessly spent hundreds of thousands of dollars in emergency jobs money on phantom workers and token or nonexistent training. The Atlanta Workforce Development Agency had come under scrutiny before. The city auditor had recommended shuttering the agency.
Missing gas. The public works department's lax oversight of fuel stations and fuel cards that employees use to fill up city vehicles could cost the city up to $320,000 worth of fuel each year, a Dec. 2012 city audit found.
The Atlanta Department of Public Works can’t account for at least $2.2 million in materials, lacks critical inventory management controls and is vulnerable to undetected theft, according to a new report from the city auditor.
City Auditor Leslie Ward studied the department’s Office of Transportation earlier this year and found it was unable to locate a third of the individual items requested, such as building materials, tools and supplies. It inaccurately recorded quantities for 67 out of 68 randomly samples categories. And overall, the audit shows, the office couldn’t account for 78,000 items.
It’s unclear if the bulk of the unaccounted-for items, about $2 million in asphalt, was used or not. The transportation office, one of four within Public Works, is responsible for the city’s street system.
Her findings are another black eye on the city following widespread reports of theft and missing equipment from the Department of Watershed Management. Mayor Kasim Reed's administration recently fired 13 Watershed employees following an investigation by the city's law department.
Reed called for “a complete and robust investigation” into the public works department, and said his office would then take “decisive action that is clear” that could include staffing changes.
He pointed to recent staffing shake-ups in the water department, as well as in the Atlanta Workforce Development Agency, as evidence he takes reports of financial mismanagement seriously. Reed said he plans to focus more intently on operations after spending his first term securing the city's financial footing.
“Folks at home need to understand that one, we take the role of the auditor very seriously. But we are reforming an organization that by all examples was in severe distress and we’re now recovering from that,” he said. “I think anybody who sees the steps we took at AWDA and water and sewer knows that losing $2 million in equipment will not stand.”
Ward's audit is the latest in several she's conducted into the department. Two years ago, Ward found Public Works had lax controls over fuel usage, a problem that could cost the city as much as $320,000 annually.
Ward said the current findings raise questions about the department’s management at a time the city is confronting aging infrastructure problems.
Reed plans to ask voters to approve an infrastructure bond worth up to $250 million next year to tackle the city’s billion-dollar backlog in repairs to roads, sidewalks and bridges. Public Works will play a primary role in carrying out those plans, should voters approve the measure.
“Certainly now with an infrastructure bond coming up … you’d want a stronger operation and you’d want better controls over the equipment and parts,” she said.
District 7 Councilman Howard Shook said the report “is one of the more alarming audits I’ve ever seen here.”
Though Ward found no direct evidence of theft, “it’s a Petri dish for that kind of activity,” Shook said.
Ward said six transportation office employees are responsible for inventory management, but that staff lacked a “full understanding” of the department’s software. Many employees said they rely on paper purchase orders and spreadsheets to track equipment. At the time of her audit, the employees reported having $13.7 million in equipment on hand.
The bulk of the unaccounted for materials was $2 million dollars in asphalt. Ward said it’s unclear whether the asphalt was improperly used, or simply improperly inventoried.
“You don’t know if it was misused, or disposed of, or actually used for the right reasons — for the city,” Ward said, adding “There’s always a risk that the asphalt was used for an unintended purpose.”
Ward listed problems that go far beyond shoddy record keeping, such as public works facilities lacking proper security measures. One facility, the auditor found, has a broken fence and dysfunctional cameras.
District 8 Councilwoman Yolanda Adrean said the employees responsible for inventory “have utterly failed.”
“I used to be an auditor,” she said. “If you had a sample of 68, and 67 are in error, that means there is a complete breakdown of internal controls and you have to go bigger and you have to count everything from scratch.”
Adrean called for an outside body to conduct an independent inventory count, saying she wouldn’t trust results produced by current employees whose jobs it is to keep track of equipment.
“They’ve already proven they’re incapable of it,” she said.
Public Works Commissioner Richard Mendoza said his department agrees with Ward’s recommendations, which include developing written policies and procedures for inventory management and beefing up security at public works facilities.
Ward also recommended purchasing a barcode system to track equipment, and for Mendoza to work with the city’s information technology department on training.
Mendoza pledged to return to the city utilities committee with regular reports regarding a tighter inventory management control process.
“Obviously we have some systemic challenges and some opportunities for some systemic improvements,” he said.
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