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Monday, Aug 15, 2022
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City Literally Losing Millions in Fixed Assets

Editor’s note: This is the first of three columns in a series that will review the status of audits from L.A. City Controller Wendy Greuel. VICA has worked with city controllers over the years to ensure audits are heard by the City Council and recommendations are implemented. An audit released last spring by L.A. City Controller Wendy Greuel would make any business person cringe. The Audit of Citywide Fixed Assets and Equipment (May 3, 2010) found that departments in the City of Los Angeles are doing little to keep track of furniture, computer equipment and other big-ticket items. Controller Greuel’s office reviewed three city departments (Recreation and Parks, Information Technology Agency and Department of Public Works Bureau of Sanitation) from July 2007-July 2009, evaluating the way the departments were managing and tracking fixed assets and equipment. The appalling results revealed that these departments are not properly accounting for equipment in either of the city’s two automated systems and failing to perform physical inventories. Due to this lack of oversight, departments are unable to locate nearly half their assets and allowing items to sit unused for years. It would be difficult for a company to stay solvent with such obvious mismanagement of assets. If a business leader were to discover anything close to this type of negligence in his or her organization, department managers would be held accountable and other changes would be made immediately to better manage inventory. Poor record This, of course, is not the case with the City of Los Angeles. It has been nearly a year since the audit was released and none of the 11 recommendations from the audit have been fully implemented, according to the Controller’s audit scorecard. The scorecard, released this year by Controller Greuel’s office, tracks the progress of action taken on audit recommendations. Of the audits included in the report, nearly half have yet to see any actual progress in implementation. Audit follow-up is an ongoing problem for the City of Los Angeles. Sometimes the audits are never even reviewed by the City Council. The development and tracking of this new audit scorecard will help VICA hold city officials accountable for implementation of audit recommendations. Enacting the suggestions in the Audit of Citywide Fixed Assets is one of many ways the city could improve its efficiency and save money. The audit found nearly $1 million worth of items that departments are simply unable to locate because they have not properly managed inventory – and this was just from a small sampling of departments. No change We can only imagine how much money is wasted each day as furniture and equipment go unaccounted for or computers sit in a warehouse for so long they are obsolete by the time they are discovered. This is especially concerning since the findings in this 2010 audit were consistent with past fixed asset audits of city departments. To business owners the idea of effective inventory management is a basic concept. If there is no oversight of property it will likely be lost or stolen, a very costly result to the company. Poor inventory tracking is tantamount to throwing money in the garbage and the City of Los Angeles certainly cannot afford to waste cash. How would you recommend the city better track and manage its fixed assets? What city audits would you like VICA to monitor implementation? E-mail your responses or thoughts about the column to angela@vica.com.

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