Controls Over Accountable Property at the Baltimore Field Division of the Federal Bureau of Investigation
Report Number 04-37
Office of the Inspector General
On July 7, 2003, Robert E. Stull, a former employee of the Federal Bureau of Investigation (FBI) at the Baltimore Field Division (BFD) was sentenced to one year in prison and ordered to pay restitution after pleading guilty to the theft and sale of FBI photography equipment, valued at over $167,000. In response to these events, the Office of the Inspector General initiated this audit to assess the overall effectiveness of the BFD's property controls from procurement through disposal.
The BFD is one of 56 FBI field divisions and is located in Baltimore, Maryland. The BFD's area of coverage extends across Maryland and Delaware, and it maintains subsidiary offices, called resident agencies, in smaller cities throughout both states. For fiscal year (FY) 2004, the BFD has a total budget of about $3.3 million and currently employs about 400 people. As of January 3, 2004, the BFD's official property inventory contained 5,620 items with a total estimated acquisition cost of $22.8 million.
Property Management at the Baltimore Field Division
The BFD's central control over property is the FBI's Property Management Application, an automated property management system that allows the FBI to track the location and history of specific property items. The FBI has instituted a property threshold of $1,000 for the Property Management Application, meaning that property with an acquisition cost of less than $1,000 is generally not included in the system. However, certain items of property are to be included in the Property Management Application regardless of their cost.
At the BFD, four supply technicians are responsible for the identification and addition of new accountable property to the Property Management Application, and nine property custodians are responsible for maintaining certain categories of personal property. These property custodians maintain control over: 1) automobiles, 2) computer equipment, 3) ET1, 4) firearms, 5) laboratory equipment, 6) office equipment and fixtures, 7) photography equipment, 8) technical equipment, and word processing equipment. The property responsibilities of the property custodians are collateral to their official duties; for example, the property custodian for firearms is the firearm instructor at the BFD.
We reviewed the BFD's compliance with the regulations, policies, and procedures that are relevant to property management and examined the effectiveness of controls to account for and safeguard accountable property. We found that while overall controls appear adequate to account for and safeguard property, we found weaknesses in the following areas:
Following is a summary of the results of our audit.
FBI Definition of Accountable Property is Inadequate
The Justice Property Management Regulations require bureaus to establish personal property accountability systems and define controlled personal property as non-capitalized personal property that because of its nature must be subject to controls that are more stringent. According to the Justice Property Management Regulations, this definition includes items that because of their inherent attractiveness and/or portability, are subject to a high probability of theft or misuse and those items that contain sensitive information or are sensitive in nature.
The FBI defines accountable property as property that because of its value or nature must be accounted for on an individual basis in the Property Management Application. The FBI currently requires that accountable property having an acquisition cost of $1,000 or more, and all firearms, laptop computers, jewelry, central processing units, and secure communications equipment be recorded in the Property Management Application. Although there is no requirement to enter non-expendable property valued at less than $1,000 into the Property Management Application, at their discretion FBI division heads may establish policy for tracking property valued at less than this threshold.
We found that the FBI's current policy on accountable property is inadequate because it excludes property from the Property Management Application that would constitute controlled personal property under the Justice Property Management Regulations. For example, the FBI does not currently mandate that items such as cameras, televisions, and videocassette recorders be tracked in the Property Management Application even though they fall under the definition of controlled personal property in the Justice Property Management Regulations. While we found that four of the nine property custodians at the BFD are maintaining their own tracking systems for items such as digital cameras and tape recorders, these systems do not contain the required elements of a property management system and the property custodians do not perform physical inventories.
To address these deficiencies, we recommend that the FBI amend its definition of accountable property to mandate the tracking of certain property items in the Property Management Application that cost less than $1,000, for which tracking is currently discretionary.
Procurement and Receipt of Property
We tested 30 procurement actions from FY 2003, representing 55 property items, to determine if the BFD had properly recorded accountable property in the Property Management Application. We found no discrepancies. However, while reviewing credit card purchases we found that individual credit card bills were approved for payment without adequate supporting documentation for the charges. We recommend that the BFD ensure that requisition forms are completed and approved before each credit card purchase and that they be adequately supported as to the amount and necessity of the purchase.
We also determined that items that should be included in the Property Management Application might not have been added due to inadequate segregation of duties between the ordering and receipt of property at the BFD. Inadequate segregation of duties between the ordering and receipt of property was a contributing factor as to why Stull's property thefts at the BFD went undetected for three years. Although supply technicians are responsible for adding property to the Property Management Application when it is received at the BFD, Stull was able to order and directly receive property without proper oversight. The BFD has modified its procedures with regard to photography equipment to strengthen controls, but has not done so in other property areas. We recommend that the appropriate supply technician first receive all new property.
Location Testing and Completeness of Property Records
In order to test whether the BFD could locate certain property items and produce them for inspection, we requested a universe of the property designated to the BFD in the Property Management Application. The data provided by FBI Headquarters from the Property Management Application contained 5,620 records of property located at the BFD. The databases maintained by the property custodians of the under $1,000 property in their control included a combined 6,071 property items that were not included in the Property Management Application.
We selected statistical samples from each of the universes and requested that the BFD present these items to us for verification. As summarized in the following table, our results indicate that the BFD is more likely to find property listed in the Property Management Application than property tracked by the property custodians. Items listed as "$1,000 and Over" were in the FBI's Property Management Application. Items listed as "Under 1,000" were not included in the Property Management Application.
BFD Property Universes and Results of OIG Testing
Projecting our results to the Property Management Application population of 5,620 items, at least 17 of these property items (0.3 percent) would be unverifiable - that is, in the "could not determine" category.2 Similarly, projecting to the population of 6,071 "under $1,000" items tracked by property custodians, the BFD would not be able to locate at least 570 of these property items (9.4 percent) and at least 133 of these property items (2.2 percent) would be unverifiable. In our judgment, by including additional items in the Property Management Application, the BFD could improve its ability to locate and control property. Our recommendation to the FBI is that it amend its definition of accountable property to require that additional items be tracked in the Property Management Application.
As an additional test of how complete the BFD's property databases were, we physically selected 55 property items during walk-throughs of the BFD and attempted to trace the items to the appropriate database system. Forty-eight of the 55 items were valued at $1,000 or more. Each of these items was in the Property Management Application as required. With regard to the remaining 7 items, which had reported costs of under $1,000, two items were in the separate inventory databases maintained by the property custodians, but the other five were not.
Frequency and Results of Physical Inventories
The Justice Property Management Regulations require the FBI conduct a complete physical inventory of all capitalized property3 at least once per year and a complete physical inventory of all controlled personal property at least biennially. The FBI's Accountable Property Manual provides a description of the FBI's inventory process that is in compliance with the Justice Property Management Regulations. Since FY 2001, the BFD has adhered to the requirements of the FBI and the Justice Property Management Regulations for biennial and annual inventories and conducted its most recent biennial inventory in FY 2003. In addition, because of the photography equipment thefts, the BFD conducted a special inventory in that property area in January 2003 and, as a result, developed a complete list of all accountable and non-accountable property in the photography equipment property area. The BFD provided copies of Report of Lost/Stolen Property (FD-500) forms that corresponded to the 22 property items still listed in the Property Management Application as lost, missing, or stolen since the 2003 biennial inventory, and it appeared that the BFD conducted adequate searches for and reviews of circumstances for these missing items.
We tested the BFD's disposal of property for proper documentation and timeliness. The FBI's Accountable Property Manual includes a requirement that once FBI Headquarters approves the disposal of an item of property, the field office has 30 days to dispose of it. The BFD disposed of or identified as excess 474 items since January 1, 2003. In order to determine whether the BFD received the appropriate authorization to dispose of these items and whether the items were disposed of in the provided amount of time, we reviewed documentation for a judgmental sample of 47 items (10 percent). We found minor exceptions in several areas but only one item that had not yet been disposed of.