PROPERTY MANAGEMENT Opportunities Exist to Improve Personal Property Accountability and Visibility March 2017 OIG-17-4 Office of Inspector General U.S. Government Accountability Office Report Highlights March 9, 2017 PROPERTY MANAGEMENT Opportunities Exist to Improve Personal Property Accountability and Visibility Objective This report addresses the extent to which GAO maintained efficient and effective accountability over personal property acquired with GAO purchase cards. What OIG Found GAO’s policy and procedures allow for flexibility when determining whether personal property will be recorded in GAO’s centralized property database (Asset Manager). However, we found that decisions regarding whether property would be recorded in Asset Manager were primarily based on cost and nature of the property and did not fully support operations, including key programs and activities. Further, offices were relying on ad hoc spreadsheets to identify and track personal property purchased with a purchase card. What OIG Recommends OIG is making one recommendation intended to strengthen the efficiency of personal property accountability controls. Specifically, we recommend that the Managing Director of Infrastructure Operations complete efforts to identify and assess ad hoc tracking mechanisms (e.g., spreadsheets) to determine how GAO’s central accountability database can be used to provide accountability over personal property consistent with GAO policy, program needs, and privacy considerations. In its written comments to the report GAO agreed with our recommendation and has initiated steps to address and strengthen its personal property controls. OIG-17-4 Property Management United States Government Accountability Office Letter March 9, 2017 Memorandum For: Gene L. Dodaro Comptroller General of the United States From: Adam R. Trzeciak Inspector General Subject: Transmittal of Office of Inspector General (OIG) Audit Report Attached for your information is our report, Property Management: Opportunities Exist to Improve Personal Property Accountability and Visibility (OIG-17-4). The audit objective was to evaluate the extent to which GAO maintained efficient and effective accountability over personal property acquired with GAO purchase cards. We determined that decisions for reporting personal property in GAO’s centralized property database (Asset Manager) were primarily based on cost and nature of the property and did not fully support operations, including key programmatic activities (e.g., reasonable accommodations). As a result of our work, GAO issued property management guidance addressing our finding that staff consider GAO program and activity needs when making accountability determinations. We also found that offices were relying on ad hoc spreadsheets to identify and track personal property purchased with a purchase card. The report contains one recommendation aimed at strengthening GAO’s personal property accountability controls. GAO agreed with and plans to address our recommendation by initiating efforts to identify the extent to which ad hoc tracking mechanisms are in use and to assess whether additional changes to the agency’s personal property accountability process should be implemented. Management comments are included in Appendix I of our report. Action taken in response to our recommendation is expected to be reported to our office within 60 days. We are sending copies of this report to the other members of GAO’s Executive Committee, GAO’s Congressional Oversight Committees, GAO’s Audit Advisory Committee, and other managers with property management program responsibilities. The report is also available on the GAO website at http://www.gao.gov/about/workforce/ig.html. If you have questions about this report, please contact me at (202) 512-5748 or [email protected]. Attachment OIG-17-4 Property Management Table of Contents Introduction .......................................................................................................................... 1 Objective, Scope, and Methodology ..................................................................................... 1 Background .......................................................................................................................... 2 GAO’s Purchase Card Program ........................................................................................ 2 GAO’s Personal Property Accountability ........................................................................... 3 Asset Manager Was not Used to Support Accountability and Visibility over Personal Property .................................................................................................................. 4 Some Items Were Excluded from Asset Manager Due to an Emphasis on Cost ............... 4 Alternative Tracking Mechanisms Rather than Asset Manager Were Used to Maintain Accountability over Some Personal Property Items .......................................................... 6 Conclusion ........................................................................................................................... 9 Recommendation ............................................................................................................... 10 Agency Comments and Our Evaluation .............................................................................. 10 Appendix I: Comments from the U.S. Government Accountability Office ............................ 11 Appendix II: Major Contributors to This Report ................................................................... 12 Appendix III: Report Distribution ......................................................................................... 13 Page i OIG-17-4 Property Management Table Table 1: GAO Order 0621.3 Nonexpendable Noncapitalized Personal Property Accountability Criteria ............................................................................................. 4 Abbreviations FMS Facility Management and Services WAE Workplace Adaptive Equipment IESS Integrated Electronic Security System RA Reasonable Accommodations ISTS Information Systems and Technology Services Page ii OIG-17-4 Property Management Introduction During fiscal year 2015, GAO offices used purchase cards to acquire about $1.5 million in goods and services to support agency operations. While most of these transactions were for supplies or services, such as training or consulting fees, some purchases were for property.1 Personal property, including laptops, monitors, and furniture, is generally acquired in bulk through contracts with vendors and received through a central GAO receiving unit within GAO’s Facility Management and Services (FMS), Property Branch (Property Branch). However, purchase cards may be used by authorized cardholders to purchase individual personal property items below a specific dollar threshold, generally $3,000,2 on an as-needed basis. A benefit and risk of purchase cards is that a cardholder or requestor can receive personal property items directly from a vendor rather than through GAO’s central receiving unit. If property is received directly from a vendor, it is the cardholder’s responsibility to notify GAO’s property branch or the appropriate field office contact of the purchase to ensure that proper accountability is maintained. Well designed and implemented controls, including policy and procedures, support both financial and physical accountability of tangible assets used in operations. Such policy and procedures are intended to ensure that the agency knows what was purchased and when, its cost, where it is located, and who has possession of the property. In addition, sound management controls, including tracking and monitoring activities, improve the efficiency and effectiveness of operations including key programs and activities such as GAO’s reasonable accommodations and telework programs. Effective accountability controls also support management directives or expectations that personal property issued to an employee, contractor, or others be returned when there is no longer (1) a need for the item or (2) an active relationship (e.g., employment) so that the property can be reissued, as needed. Without effective policy and procedures to manage and control government-owned property, GAO may not be aware of the existence or condition of personal property acquired through its purchase card program in support of key programs and activities— leaving the agency vulnerable to incurring unnecessary costs and property loss or misuse. Objective, Scope, and Methodology This report addresses the extent to which GAO maintained efficient and effective accountability over personal property acquired with GAO purchase cards. To achieve our audit objective, we interviewed GAO property and acquisition management personnel and reviewed the agency’s purchase card and property management policies and procedures to identify and understand GAO controls for ensuring that 1All property is classified as either real or personal property. GAO defines real property as any interest in land, together with improvements, structures and fixtures, and appurtenances. Personal property is defined as all property other than real property. 2During the period of our review, the Federal Acquisition Regulation (FAR) 2.101 generally defined micropurchases as acquisitions of supplies or services (except construction), the aggregate amount of which does not exceed $3,000. Effective October 1, 2015, the base threshold amount for micropurchases was increased to $3,500. 48 C.F.R. § 2.101; see also 80 Fed. Reg. 38292 (July 2, 2015). Page 1 OIG-17-4 Property Management property acquired through purchase cards was identified and tracked consistent with management directives and objectives. We also identified the universe of 2,177 GAO purchase card transactions recorded by U.S. Bank for fiscal year 2015. From this universe, we judgmentally eliminated transactions3 based on criteria such as vendor type; cardholder team, office, and unit; cardholder responsibilities; dollar value; and bank transaction codes associated with services, office supplies, and other transaction types that we believed were for non-property-related purchases. We also eliminated transactions including refunds, items less than $100 and property purchases reviewed in Asset Manager during our planning work. Our analysis identified 113 purchase card transactions with a total cost of approximately $83,100 that we determined would most likely include personal property.4 We then selected a nongeneralizable sample of 19 transactions (total of 33 items) with a total cost of about $12,000, which we reviewed to assess the effectiveness of GAO accountability controls over personal property acquired with a purchase card. To ensure the reliability of GAO’s purchase card transaction data, we compared select GAO purchase card data recorded by U.S. Bank to transaction support recorded in employee purchase card logs, GAO’s records management system,5 and Asset Manager, and conducted follow-up interviews with appropriate purchase card program and acquisition managers. We also verified the physical existence of each property item included in our sample of purchase card transactions. We conducted this performance audit from November 2015 through March 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. Background GAO’s Purchase Card Program During fiscal year 2015, up to 48 GAO employees in 25 GAO offices, teams, and units were authorized, under GAO’s Purchase Card Program, to purchase goods or services using a purchase card. GAO’s purchase card program is managed by GAO’s Financial Management and Business Operations’ office of Acquisition Management in partnership with U.S. Bank, the commercial bank responsible for maintaining GAO’s purchase card transactions for purposes of reporting and program management. Transaction data maintained by U.S. Bank includes the cardholder name, transaction date, transaction cost, and merchant name. In 3Data obtained from U.S. Bank did not contain sufficient detail to identify personal property items purchased. 4A purchase card transaction can include services, goods-including property and consumable items, or a combination of these. 5GAO’s Document Management/Electronic Records Management System (DM/ERMS) is the agency’s official records management system that is intended to capture, preserve, provide ready access to, and protect the integrity of important documents, records, and files related to GAO’s business activities, processes, and engagements. Page 2 OIG-17-4 Property Management addition, GAO cardholders maintained a purchase log recording each purchase card transaction. Information reported in these logs included merchant name, date of purchase, description of item(s) purchased, cost of item(s) purchased, and approval of funds availability.6 To ensure accountability, cardholders should report property purchases to the property branch and the appropriate field office contact regardless of dollar value. The property branch makes the decision whether to record the item in GAO’s property records database, Asset Manager. GAO’s Personal Property Accountability Personal property is all property other than real property. This generally includes information technology equipment, printers, furniture, and other non-real-property used in operations. GAO personal property is classified as either expendable personal property or nonexpendable personal property. Expendable personal property is consumed in use (e.g., paper) or may be reused but has a low unit cost. Nonexpendable personal property, which is the focus of our audit, consists of tangible assets that have a useful life of one or more years and were acquired for use in GAO operations. Additional criteria, such as dollar value, its intended use, and an expectation that the item will be returned, may also be applied when determining whether a personal property item is recorded in Asset Manager. The property branch is responsible for establishing policy and procedures for managing, controlling, and safeguarding GAO’s personal property. Asset Manager To achieve its mission, the property branch maintains a centralized database, Asset Manager. The property branch and other GAO offices or units use it to track property. The property branch maintains the integrity of data recorded in Asset Manager through periodic inventories of select property and by limiting a user’s database access rights to only those property items within their assigned areas of responsibility. Data maintained in Asset Manager are used to • support GAO’s financial reporting; • track custody and location of GAO’s property; • manage property maintenance, supplies, and stock; • identify property to be returned by employees upon their departure; and • complete GAO’s annual property inventory. A primary system of record, such as Asset Manager, (1) provides enhanced visibility and a single authoritative source of data regarding property used in agency operations, including programs and activities, (2) supports more efficient activities for maintaining the integrity of the data, and (3) eliminates unnecessary administrative costs associated with maintaining and reconciling numerous tracking mechanisms, including spreadsheets, used to identify and track property. 6Beginning Oct. 1, 2015, this process was automated and incorporated into U.S. Bank’s Online Access System. Page 3 OIG-17-4 Property Management Property Management Policy and Procedures GAO’s property branch is responsible for establishing and maintaining property policy and procedures. GAO Order 0621.3, Control of Capitalized and Other Accountable Personal Property, establishes policy, procedures, and responsibilities for controlling GAO’s property.7 Among the management directives included in GAO Order 0621.3 are criteria for applying accountability controls—such as tagging and recording—to nonexpendable personal property items that do not qualify as capitalized assets (see table 1) for financial statement reporting. Table 1: GAO Order 0621.3 Nonexpendable Noncapitalized Personal Property Accountability Criteria Personal Property Tracked in Category Cost Threshold Additional Criteria Asset Manager Accountable Equipment or furniture Item has a serial number. Yes >$1,000 but <$15,000a Non-Accountable Equipment <$1,000 or None No Furniture <$15,000 Tracked Equipment <$1,000 Item supports asset management Potentiallyb needs for • maintenance, supply, and stock information, and/or • return of the item to GAO. Source: OIG analysis as of March 2017. aIncludes safes, due to the nature of their use. bPer GAO Order 0621.3, the property branch personnel in conjunction with other units, as appropriate, determine whether items are tracked in Asset Manager. In addition, while not tagged with a unique GAO identifier (i.e., barcode), some tracked items may be tagged with a “Property of GAO” label. Asset Manager Was not Used to Support Accountability and Visibility over Personal Property We substantiated the existence of all 33 personal property items acquired through the 19 purchase card transactions selected for review. However, even though GAO policy allows for flexibility when determining whether low cost items (such as those obtained through a purchase card) are recorded in Asset Manager, none of the property items were recorded due to their unit cost (less than $1,000) and nature of the item (i.e., furniture). Instead, we found that GAO offices, including the property branch, used ad hoc spreadsheets, rather than Asset Manager, to identify and track property purchased and used to support security operations, and the agency’s reasonable accommodations and telework programs. In each case the items were purchased for a specific activity or program and were issued to individuals with an expectation that the property would be returned. Some Items Were Excluded from Asset Manager Due to an Emphasis on Cost In general, equipment costing less than $1,000 or furniture costing less than $15,000 is not considered trackable under the criteria in GAO Order 0621.3. Equipment costing less than $1,000 may be tracked in Asset Manager (but not barcoded or inventoried) if tracking is required for maintenance, supply, and stock information or 7GAO Order 0621.3, Control of Capitalized and Other Accountable Personal Property (Aug. 3, 2012). Page 4 OIG-17-4 Property Management because it is in the custody of individual employees who are required to return it when they leave the agency. Although policy provides these explicit criteria, our review revealed that property accountability determinations (i.e., whether to track property in Asset Manager) were based on unit cost or property type (i.e., furniture). This resulted in some property included in our review being excluded from Asset Manager. Our review of documentation, including personal property requests and receipts, found that the 19 purchase card transactions reviewed were for 33 items ranging in value from $32 to $1,243 and comprised two specific personal property categories: workplace adaptive equipment (WAE) and security equipment.8 Workplace Adaptive Equipment Sixteen of the nineteen purchase card transactions totaling about $10,200 were for 16 WAE items, including height-adjustable desks and electronic chairs, provided to GAO employees for use at their official duty station or in their home. None of the 16 items with unit cost ranging from $469 to $1,243 were recorded in Asset Manager even though they supported GAO’s reasonable accommodations and telework programs and the agency expected the property to be returned when employees separate. Property branch personnel explained that they did not record the WAE in Asset Manager because it was furniture with a unit cost of less than $1,000, which is well below the $15,000 per unit threshold established in GAO Order 0621.3. They also said they believed there was a potential privacy concern at the time because most of the equipment was issued to employees through GAO’s reasonable accommodations program. Through discussions with both property branch personnel and GAO’s Reasonable Accommodations Coordinator regarding the agency’s need to track WAE items, we determined that the 16 WAE items should be tracked in Asset Manager. The Property Branch Chief agreed with our determination and informed us that, in response to our work; FMS plans to develop a reasonable accommodations policy and is working with Information Systems and Technology Services (ISTS) so that reasonable accommodations property can be added to Asset Manager with sufficient privacy protections. The Property Branch Chief noted that the projected completion date for these actions will be the end of fiscal year 2017. GAO Order 0621.3 provides flexibility in determining whether items that do not meet unit dollar value thresholds should be recorded in Asset Manager particularly if there is an agency expectation that the item should be returned and possibly reissued or returned to stock. However, as our review of select purchase card transactions found, the property branch primarily focused on unit cost and property type in determining whether items would be recorded in Asset Manager thereby excluding items that were used in key agency programs and activities from Asset Manager. 8GAO makes reasonable accommodations to allow employees to perform the essential functions of their job. Workplace adaptive equipment, such as a height-adjustable desk, is one way in which GAO accommodates specific limitations of employees. Page 5 OIG-17-4 Property Management