	IHS Has Had Millions of Dollars in Lost or Stolen Property

We substantiated the allegation of gross mismanagement of property at  IHS. Specifically, we found that thousands of computers and other  property, worth millions of dollars, have been lost or stolen over the past  several years. Despite  IHS attempts to obstruct our investigation, our full physical inventory at  headquarters and our random sample of property at 7 field locations,  identified millions of dollars of missing property. IHS Records Indicate at Least $15.8 Million of Property Is Lost or Stolen

Our analysis of Report of Survey records from IHS headquarters and field  offices show that from fiscal year 2004 through fiscal year 2007, IHS  property managers identified over 5,000 lost or stolen property items  worth about $15.8 million. First, IHS  does not consistently document lost or stolen property items. For  example, 9 of the 12 IHS regional offices did not perform a full physical  inventory in fiscal year 2007. Some of the  egregious examples of lost or stolen property include:  In April 2007, a desktop computer containing a database of uranium  miners’ names, social security numbers, and medical histories was  stolen from an IHS hospital in New Mexico. In September 2006, IHS property staff in Tucson attempted to write off  over $275,000 worth of property, including Jaws of Life equipment  valued at $21,000. GAO Inventory Testing Reveals Lost or Stolen IT Equipment at IHS Headquarters

To substantiate the whistleblower’s allegation of missing IT equipment, we  performed our own full inventory of IT equipment at IHS headquarters. These items, valued at  around $2 million, included computers, computer servers, video  projectors, and digital cameras. GAO Testing Identifies Lost or Stolen IT Equipment at Seven IHS Field Locations

We selected a random sample of IT equipment inventory at seven IHS field  offices to determine whether the lack of accountability for inventory was  confined to headquarters or occurred elsewhere within the agency. Specifically, we estimate that for the 7 locations, about  1,200 equipment items or 17 percent, with a value of $2.6 million were lost,  stolen or unaccounted for. Weak Tone at the Top and Other Control Weaknesses Leave IHS Highly Vulnerable to Loss, Theft, and Waste

The lost or stolen property and waste we detected at IHS can be attributed  to the agency’s weak internal control environment and its ineffective  implementation of numerous property policies. In particular, IHS  management has failed to establish a strong “tone at the top” by allowing  inadequate accountability over property to persist for years and by  neglecting to fully investigate cases related to lost and stolen items.
Why GAO Did This Study

In June 2007, GAO received information from a whistleblower through GAO's FraudNET hotline alleging millions of dollars in lost and stolen property and gross mismanagement of property at Indian Health Service (IHS), an operating division of the Department of Health and Human Services (HHS). GAO was asked to conduct a forensic audit and related investigations to (1) determine whether GAO could substantiate the allegation of lost and stolen property at IHS and identify examples of wasteful purchases and (2) identify the key causes of any loss, theft, or waste. GAO analyzed IHS property records from fiscal years 2004 to 2007, conducted a full physical inventory at IHS headquarters, and statistically tested inventory of information technology (IT) equipment at seven IHS field locations in 2007 and 2008. GAO also examined IHS policies, conducted interviews with IHS officials, and assessed the security of property.

What GAO Found

Millions of dollars worth of IHS property has been lost or stolen over the past several years. Specifically: IHS identified over 5,000 lost or stolen property items, worth about $15.8 million, from fiscal years 2004 through 2007. These missing items included all-terrain vehicles and tractors; Jaws of Life equipment; and a computer containing sensitive data, including social security numbers. GAO's physical inventory identified that over 1,100 IT items, worth about $2 million, were missing from IHS headquarters. These items represented about 36 percent of all IT equipment on the books at headquarters in 2007 and included laptops and digital cameras. Further, IHS staff attempted to obstruct GAO's investigation by fabricating hundreds of documents. GAO also estimates that IHS had about 1,200 missing IT equipment items at seven field office locations worth approximately $2.6 million. This represented about 17 percent of all IT equipment at these locations. However, the dollar value of lost or stolen items and the extent of compromised data are unknown because IHS does not consistently document lost or stolen property, and GAO only tested a limited number of IHS locations. Information related to cases where GAO identified fabrication of documents and potential release of sensitive data was referred to the HHS Inspector General for further investigation. GAO identified that the loss, theft, and waste can be attributed to IHS's weak internal control environment. IHS management has failed to establish a strong "tone at the top," allowing property management problems to continue for more than a decade with little or no improvement or accountability for lost and stolen property and compromise of sensitive personal data. In addition, IHS has not effectively implemented numerous property policies, including the proper safeguards for its expensive IT equipment. For example, IHS disposed of over $700,000 worth of equipment because it was "infested with bat dung."