These property losses are in addition to what we  identified in our June 2008 report. These reports  identified that about 1,400 items with an acquisition value of about $3.5  million were reported lost or stolen in little over a year. Items that IHS continued to search for include the following:   A 2002 ultrasound unit valued at $170,000, a 2003 X-ray mammography  machine valued at $100,795, and a 2004 medication dispensing system  valued at $168,285. A new pharmacy tablet counter with an acquisition value of $4,000  from a Washington location. Our full  inventory testing at IHS headquarters identified that out of the 1,518 items  tested that were on IHS’s inventory records as of December 5, 2008, 126  items with an acquisition value of $216,000 (or about 8 percent of the items  tested) were lost, stolen, or unaccounted for—including 13 computers  purchased in the summer of 2008. Specifically, we estimate that for the six  locations, about 800 equipment items with an acquisition value of $1.7  million were lost, stolen, or unaccounted for. Aside from issuing a memorandum from the IHS  Director that restated and refined existing IHS policies, IHS has taken little  action to provide assurance that employees are aware of and complying  with property policies. One way to enforce policies involves holding  individuals accountable. For example, in December 2008, the IHS executive in  charge of the property group and other areas received a $13,000  performance award (8 percent of the executive’s salary) from IHS senior  leadership. This award was granted 5 months after the July 2008 hearing  exposed mismanagement of property under the executive’s purview. Out of 1,400 items with an acquisition value of $3.5  million reported as lost or stolen in IHS Reports of Survey for fiscal year  2008 through January 2009, IHS could only provide one example in which  an employee was found to be financially liable for lost or stolen property. However, as of February 2009, the individual has still not reimbursed the  government for the loss—4 months after he was found financially liable. HHS agreed with all six of our  recommendations to strengthen property management at IHS. GAO Recommendation #2. GAO Recommendation #3. Appendix I: Scope and Methodology

To determine whether property loss, property theft, and wasteful spending  continues at the Indian Health Service (IHS) and to what extent IHS made  progress in implementing our prior recommendations, we analyzed IHS  documents that identified lost or stolen property from fiscal year 2008  through January 2009, reviewed IHS and Department of Health & Human  Services (HHS) responses to our recommendations and updated policies  and procedures, conducted a full physical inventory of property at IHS  headquarters, and statistically tested information technology (IT)  equipment inventory at six selected IHS field locations. Although IHS property at the field locations includes inventory items such  as medical equipment and heavy machinery, we performed a statistical  test of only IT equipment inventory at six IHS field locations. Although we did not perform a systematic review of IHS internal controls,  we identified key causes of lost and stolen property and wasteful spending  at IHS by examining IHS and HHS policies and procedures, conducting  interviews with IHS officials and our observations of property through our  inventory testing.
Why GAO Did This Study

In 2008, GAO issued a report and testimony revealing gross mismanagement of property at the Indian Health Service (IHS). GAO found that 5,000 items with an acquisition value of $15.8 million were reported lost or stolen for fiscal years 2004 through 2007. GAO attributed the property mismanagement and waste to weak internal controls. GAO made 10 recommendations to IHS. IHS ultimately agreed to implement all 10 recommendations. Given the extent and seriousness of the property management problems at IHS, GAO was asked to determine (1) whether property loss, property theft, and wasteful spending continue at IHS; and (2) to what extent IHS made progress in implementing GAO's prior recommendations. GAO analyzed IHS property records from fiscal year 2008 through January 2009, conducted a full physical inventory at IHS headquarters, and performed a probability sample of information technology equipment inventory at six IHS field locations. GAO also examined IHS policies, analyzed documents, and conducted interviews with IHS officials.

What GAO Found

IHS continues to lose property at an alarming rate, reporting lost or stolen property with an acquisition value of about $3.5 million dollars in little over a year, including new medical equipment. IHS management's failure to implement most of our June 2008 recommendations and hold staff accountable for losses contributes significantly to ongoing property problems. These property losses at IHS are in addition to what GAO identified in its June 2008 report. GAO completed a full audit of IHS headquarters and found that 126 items worth $216,000 (or 8 percent of the items tested) had been lost, stolen, or were otherwise unaccounted for. GAO also estimates that about 800 equipment items at six field locations with an acquisition value of about $1.7 million were lost, stolen, or unaccounted for. Furthermore, although IHS performed an annual inventory as GAO recommended, as of March 2009, it had not finished reconciling the inventory and cannot locate many items, including medical equipment. These items include a 2002 ultrasound unit valued at $170,000; a 2003 X-ray mammography machine valued at $100,795; dental chairs, cardiac and vital sign monitors; and a pharmacy tablet counter machine. Aside from issuing a memorandum from the IHS Director that restated and refined existing policies, IHS has taken little action to ensure that employees are aware of and complying with property policies. One way to enforce policies involves holding individuals accountable; however, GAO found that the Senior Service Executive in charge of the IHS property group and other areas was given a $13,000 bonus after GAO's report exposed mismanagement of property under the executive's purview. Furthermore, IHS could only provide one example of an individual held financially liable for lost or stolen property over a 1-year period; but at the time of our audit, the individual still had not reimbursed the government for the loss. GAO also identified the following examples where IHS investigated the loss of property but did not hold anyone accountable.