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Government and People
OFFICE OF THE DISTRICT
OF COLUMBIA AUDITOR
Deborah K. Nichols
Review of Metropolitan Police Department Vehicles Purchased During Fiscal Years 1996
|Total Vehicles Purchased and Received||652|
|Total Vehicles Listed On FMD Inventory Difference||618|
Also, the inventory listing did not reflect cost data for any of the 618 vehicles. Internal control standards promulgated by the United States General Accounting Office (GAO) state, in part, that all transactions [accounting and inventory] should be promptly recorded to maintain their relevance and value to management. The inaccuracy between MPD's accounting and inventory records may be attributed, in part, to a lack of internal MPD policies and procedures governing the management and accountability of MPD's fixed assets. Fixed assets are defined as "long-lived tangible items that provide an economic benefit for a number of future periods." Police vehicles are classified as fixed assets. The general policies of the Office of the Chief Financial Officer regarding fixed assets as set forth in its Financial Policies and Procedures Manual, Chapter V, entitled "General Accounting Policies and Procedures," state in relevant part the following:
A. Fixed assets must be adequately safeguarded. Physical and accounting control policies established by the Office of Financial Operations and Systems (OFOS) must be followed by each agency. Each agency must implement the following policies: . . .
C. Each Agency must designate a Property Control Officer to account for fixed assets and ensure that all divisions within the agency comply with District requirements. . . .
E. All acquisitions and disposals of fixed assets must be properly authorized by the agency Director or designee. Some acquisitions and disposals, in addition to the agency Director; must be approved by other regulating bodies such as the Department of Administrative Services, Mission Support, the Control Board, the City Council, and/or the Mayor.
F. All agencies must maintain all documentation relating to the acquisition and disposal of the fixed asset through the life of the fixed asset and for a specified time after disposal.
The OCFO's policies and procedures emphasize that "care must be taken in safeguarding and accounting for all fixed assets," and that "documents relating to the acquisition and disposal of fixed assets are to be retained throughout the life of the fixed asset and for specific periods after disposal." The complete text of the OCFO's policies and procedures governing the care of fixed assets is presented in Appendix 1.
The MPD had not established any internal policies and procedures or administrative mechanisms that could be utilized by FMD officials to effectively manage and account for the 652 vehicles purchased during fiscal years 1996 and 1997 or any other fixed assets under MPD's control. Further, MPD lacked effective internal procedures for identifying vehicles through property identification numbers, assigning vehicles to personnel, locating vehicles, assessing and reporting the condition of vehicles, determining the economic life of vehicles, and the final disposition of vehicles. Moreover, the MPD did not adequately comply with the District's fixed assets policies and procedures relative to capitalization, stewardship, and document retention.
The Auditor could not account for a 1996 black Chevrolet S-10 Blazer bearing vehicle identification number IGNDT13WOT2268383 that was purchased by MPD. Further, MPD could not provide documentation indicating that the vehicle had been sold at auction, salvaged, or transferred to another District agency. The Auditor found that MPD purchase order number FA41117 and payment voucher number 963483 revealed that the vehicle was purchased and paid for with MPD funds, and a receiving report signed by the former FMD director indicated that the vehicle was received by MPD's Fleet Management Division on September 30, 1996. This vehicle was never listed on MPD's vehicle inventory. Further, MPD never assigned a property identification number or equipment number to this asset. The paper trail ended at the point the vehicle was received by MPD's former FMD director. There was no other documentation indicating the location or status of the Chevrolet Blazer.
The former FMD director could not provide any additional documentation concerning the status and location of the $22,793 Chevrolet Blazer. The loss of this valuable asset by the Metropolitan Police Department's Fleet Management Division indicated ineffective inventory management and lax accountability and control which exposed this particular MPD asset to a significant risk of loss and/or misuse. Contrary to the Office of the Chief Financial Officer's financial policies and procedures manual on fixed assets, the MPD failed to ensure that "care [was] taken in safeguarding and accounting for all fixed assets."
|Total Vehicles Purchased and Received||652|
|Total Vehicles Listed On FMD Inventory||618|
|Vehicle Unaccounted For (Chevy Blazer)||-1|
|Vehicles Found but not listed on FMD's Inventory||-18|
|Vehicles Purchased by MPD for the Fire Department1||-6|
|Total Vehicles Observed By Auditor||643|
Table I presents nine vehicles with varying degrees of information, such as the license plate number, year, make, model, vehicle identification number and the purchase price, that the Auditor was unable to locate for audit inspection. The Metropolitan Police Department's Fleet Management Division maintained that the nine vehicles were in its current fleet at one or more of the seven police districts or satellite locations where vehicles are assigned, or that the vehicles had been sold at auction. However, after several attempts, FMD failed to produce these nine vehicles so that the Auditor could confirm that the vehicles were, in fact, in MPD's possession. Further, the audit team did not find documentation conclusively indicating that the nine vehicles had been sold at auction or transferred to other District agencies. Again, the MPD failed to adhere to the OCFO's policies and procedures on fixed assets which state that care must be taken in safeguarding and accounting for all fixed assets. Further, the agency's records should include adequate documentation to support all lawful disposition of all assets.
METROPOLITAN POLICE DEPARTMENT MISSING VEHICLE LISTING AS OF JUNE 19, 2000
|LICENSE PLATE NUMBER||YEAR, MAKE, MODEL OF VEHICLE||VEHICLE IDENTIFICATION NUMBER||PURCHASE PRICE OF VEHICLE||STATUS|
|96015*||96 Ford Crown Victoria||2FALP72W1TX110585||$20,900||Unknown|
|96096*||96 Chevrolet Lumina||2GIWL52MOT9275384||16,303||Unknown|
|96124*||96 Ford Crown Victoria||2FALP71WITX203270||18,348||Unknown|
|96147*||96 Ford Crown Victoria||2FALP71WITX203222||18,348||Unknown|
|96155*||96 Ford Crown Victoria||2FALP71W2TX203262||18,348||Unknown|
|96156*||96 Ford Crown Victoria||2FALP71W7TX203189||18,348||Unknown|
|96229*||96 Ford Crown Victoria||Unavailable||18,348||Unknown|
|97131||97 Ford Crown Victoria||2FALP71W4VX205301||19,215||Unknown|
|Total Vehicle Costs||$148,158|
Source: Metropolitan Police Department and the Office of the D.C. Auditor
*Vehicles not reflected on Fleet Management Division Inventory.
Pursuant to Title 18, Chapter 4, Section 400.1 of the District of Columbia Municipal Regulations, entitled "Motor Vehicle Title and Registration," the responsibility for issuing certificates of title for motor vehicles, the registrations, and license plates was assigned to the District's Department of Transportation, now the Department of Motor Vehicles (DMV). Contrary to established regulations, the Metropolitan Police Department, through its Fleet Management Division, ordered specialty license plates for MPD vehicles from the Department of Corrections (DOC). This irregular practice was established in 1992 and has been used by MPD's Fleet Management Division for approximately eight years.
FMD managers asserted that license plates for its vehicles were ordered from DOC based on the number of new vehicles purchased each year. However, FMD managers could not provide a complete listing of license plates ordered from the DOC for fiscal years 1996 and 1997. Moreover, the Auditor did not find, nor could MPD managers provide, legal authority authorizing the Metropolitan Police Department to order license plates from the DOC and assign the plates to its fleet of vehicles, thereby circumventing the District's motor vehicle title, registration, and inspection requirements. The Auditor observed that all other District agencies register their vehicles with and obtained license plates from the DMV.
The Auditor observed that FMD's internal controls over license plates ordered from the DOC did not provide effective management control and accountability and appeared vulnerable to misuse. The Auditor found that FMD managers did not establish an effective system of controlling, assigning, and disposing of MPD license plates and therefore could not account for all license plates or vehicles to which certain license plates were assigned. For example, the Auditor could not find the following license plates ordered for vehicles purchased during 1996 and 1997: 96230, 96231, 96232, 96233, 96234, 96237, 962402, and 97005. FMD managers stated that the license plates were not assigned to any MPD vehicles. However, FMD's inventory indicated that two of the eight license plates were assigned to a Ford and a custom trailer. Moreover, FMD managers could not locate any of the eight license plates for the Auditor's examination.
MPD license plates ordered from the DOC have a distinctive blue color with white numbers and lettering. The license plates carry with them certain empowerment such as immediate recognition by the public as belonging to the Metropolitan Police Department and potentially free parking anywhere in the District. Access to MPD license plates, which are considered valuable, sensitive assets, should be limited to authorized individuals, and accountability for their custody and use should be assigned to and maintained by an FMD employee appointed by the FMD director.
The Auditor also found that FMD had not established written policies and procedures to support and govern the purchase, receipt, security, issuance, and disposal of license plates that the Metropolitan Police Department ordered from the Department of Corrections (DOC). The former FMD director stated, without providing supporting written policies or procedures and other important documentation, that license plates were not re-used but were destroyed when vehicles bearing the plates were taken out of service. The Auditor found examples which contradicted this assertion. For example, the audit team found that license plate number 96126 was assigned to a 1996 Ford Crown Victoria possessing VIN 2FALP71W7TX203287. This vehicle was sold at auction on June 6, 1998 for $500. However, the audit team observed this same license plate number, 96126, on a marked squad car with VIN 2FALP71 W7TX203204 at the First District station. There was no explanation as to why this license plate was not destroyed, as asserted by the former FMD director. Further, the audit team could not find any records to support the reassignment of this license plate to another vehicle and could not find this particular license plate number listed on FMD's vehicle inventory.
Additionally, the audit team observed that license plate number 96105 was listed on FMD's inventory as assigned to a 1996 Chevrolet Lumina with VIN 2GI WL52MOT9278737. The audit team found the same vehicle listed on FMD's property disposal form F97-006, dated June 19, 1997, which was signed by the FMD director indicating that FMD had disposed of the vehicle. However, the audit team found this same license plate on a Ford Crown Victoria with VIN 2FALP71 W 1 TX203155 at the Fifth District police station. Again, there was no clear explanation as to why this license plate was reissued to another vehicle after records indicated that the original vehicle to which it was assigned had allegedly been transferred to the Department of Corrections. This discrepancy, among others, indicated a lack of accountability and ineffective control over MPD vehicle license plates.
Another example of the lack of control over MPD license plates included the audit team's observation of MPD license plate number 96235 on a Plymouth Acclaim, with VIN IP3AA46K2RF152390. The Auditor provided this information to the former FMD director who, after checking his inventory, stated that neither the Plymouth Acclaim nor the license plate was listed on the inventory. Further, the director stated that he could not confirm who owned the vehicle or provide information describing how or why MPD license plate number 96235 was placed on this vehicle.
GAO standards for internal controls state that all transactions and other significant events must be clearly documented, and the documentation should be readily available for examination. The Auditor observed that certain MPD fleet vehicles purchased during fiscal years 1996 and 1997 were sold at public auction or conveyed to other District agencies without creating adequate records supporting the basis for the sale or transfer.
The Fleet Management Division used property disposal action forms (PDAs) to track fleet vehicles sold at auction and transferred to other District agencies. Information required on the form included, but was not limited to, the squad car number, the shop tag plate number, the year, make and model of the vehicle, the vehicle identification number, and the police district to which the vehicle was assigned. However, MPD's property disposal action forms reviewed by the audit team were generally incomplete and failed to include an explanation as to why certain MPD vehicles were sold at auction. The following statement routinely appeared at the bottom of each form:
"The above vehicles are no longer serviceable for law enforcement patrol functions. Request authority to drop from accountable records."
The vehicle property disposal forms reviewed by the Auditor were signed by the former director of MPD's Fleet Management Division as the agency's accountable property manager. According to the then-FMD director, he and a police sergeant made decisions to dispose of MPD vehicles after discussing the condition of the vehicles with FMD mechanics. These discussions and the basis for the disposal actions were never written on property disposal action forms or in any other supporting documentation.
The Auditor was not provided with written policies and procedures detailing the specific conditions under which MPD vehicles could be disposed of and the level of management authority required for such determinations. For example, Fleet Management Division managers indicated that four vehicles with license plate numbers 96015, 96096, 96124, and 96229 had been sold at public auction. However, there were no documents describing the condition of the vehicles and no receipts to support the sale of the four (4) vehicles at public auction.
FMD further indicated that three (3) vehicles with license plate numbers 96105, 96147, and 96155 had been conveyed to other District agencies. Other than the PDA, there was no additional information to confirm that the three (3) vehicles were transferred to other District agencies. The OCFO's manual of policies and procedures governing fixed assets states that all transfers of surplus personal property between District agencies must first be approved by the Department of Administrative Services (DAS), presently the Office of Contracting and Procurement (OCP), and that agencies must adhere to procedures outlined in the District's Property Disposal Manual. Property disposal actions provided by FMD officials were inadequate and prevented the Auditor from locating these vehicles or confirming that they were, in fact, disposed of in accordance with applicable laws, regulations, and standards.
The methodology utilized by MPD's Fleet Management Division to dispose of fleet vehicles was void of accountability and structure, basically allowing one official the latitude of identifying fixed assets for disposal without corroboration from other District officials or MPD officials outside of the Fleet Management Division. The same official was also individually responsible for receiving all new fleet vehicles, in addition to accounting for, assigning, and disposing of fleet vehicles. The Auditor observed that there was no separation of duties between these key functions, i.e. receiving, assigning, and disposing of MPD fleet vehicles. The Auditor observed that fleet management regulations from other jurisdictions included, but were not limited to, specific guidelines governing vehicle purchases, retirement, replacement, and lines of authority. For example, Prince Georges County regulations include a section on new vehicle acceptance and delivery which states, in part, that "delivery of new vehicles will be made by the vendor to the Fleet Management Division. The Fleet Management Division will then forward the proper documents to the Chief, Procurement and Materiel Management Division, to effect the necessary fixed asset action." Also, the regulations included detailed guidelines to be followed before a vehicle could be retired from service such as determining its economic life, whether maintenance and operating costs had exceeded preestablished limits, minimum mileage for different types of vehicles, such as six years or 80,000 miles for a typical sedan, and a listing of all major deficiencies. The final decision to dispose of a vehicle would be made by the Chief of Procurement, not the manager of the Fleet Management Division.
The Auditor found that MPD's Fleet Management Division sold at public auction 34 MPD vehicles from its fleet that were purchased during fiscal years 1996 and 1997. Table II presents 15 of the 34 vehicles that were taken out of service and sold at auction between 5 and 18 months after the vehicles were purchased by MPD.
MPD paid approximately $273,731 for the 15 vehicles and sold them for approximately $24,005, or 8.8%, of their original value. As previously noted, the Auditor was not provided with adequate documentation to support MPD's decision to dispose of the 15 vehicles between 5 and 18 months after acquisition. Properly disposal actions for the 15 vehicles did not reflect mileage, maintenance costs, or major deficiencies, only the signature of MPD's Fleet Management Division director attesting to the fact that the vehicles were not suitable for law enforcement patrol functions. If the vehicles had been severely damaged beyond repair, then this information should have been reflected on or attached to the property disposal forms.
District of Columbia Code, Section 1-1182.3 states, in part, that the Director . . . the chief procurement official of the District, shall have the following authority and responsibility . . . .to sell, trade, or otherwise dispose of surplus supplies and services belonging to the District government. Further, the Office of the Chief Financial Officer's financial policies and procedures manual states that the Department of Administrative Services (DAS), now the Office of Contracting and Procurement (OCP), is responsible for the disposition of all surplus property, excluding vehicles which are disposed of by the Department of Public Works (DPW). The Auditor found that the Metropolitan Police Department began auctioning its own vehicles in 1999, and in January 2000 contracted with a vendor to sell at auction its surplus fleet vehicles. During the period from January to March 13, 2000, the vendor, Colonial Auction Services, returned $61,310.74 to the MPD for auctioning sixty-five (65) of its vehicles. These funds were deposited to the District's general fund.
During the relevant audit period, MPD managers believed that the MPD was granted authority to sell its own vehicles by MPD's chief contracting officer when the contract with Colonial Auction Services was negotiated and issued in January 2000. However, the contracting officer stated that his office only provided a service for MPD to auction its vehicles. MPD's general counsel's office and other accountable MPD officials provided no valid legal authority granting MPD the right to sell or dispose of its own excess and surplus vehicles. In discussing this issue with OCP's Personal Property Division (PPD) Chief and its Deputy Director for Shared Services, which has oversight responsibility for PPD, both indicated that the issue was "unsettled".
Based on Section 1-1182.3 of the D.C. Code, the District's Office of Contracting and Procurement's PPD is solely responsible for disposing of excess and surplus District personal property, including vehicles. The PPD holds an auction each month to dispose of excess and surplus District property, including vehicles from the Department of Public Works. Generally, the statute has precedence over an executive order. Therefore, despite Mayor's Order 2000-753, unless the Metropolitan Police Department has legal authority superior to Section 1-1182.3 of the D.C. Code, the disposal of surplus MPD fleet vehicles is the responsibility of the District's Personal Property Division.
The Metropolitan Police Department purchased and received 652 vehicles, including motorcycles, during fiscal years 1996 and 1997. MPD's Fleet Management Division (FMD) maintained inventory records listing only 618 of these vehicles, a difference of 34 vehicles. Due to the absence of adequate documentation, the Auditor was unable to verify the existence and location of 10 of the 652 vehicles purchased and received by the Metropolitan Police Department during fiscal years 1996 and 1997. The 10 missing vehicles included a 1996 Chevrolet Blazer and the 9 vehicles presented in Table 1.
During the audit period, the Metropolitan Police Department had not established written policies or procedures governing inventory management and accountability of its vehicle fleet. Further, non-existent or inadequate internal controls exposed MPD assets to loss and possible misuse and may have contributed to the following deficiencies:
Further, the Metropolitan Police Department failed to properly segregate specific duties, such as receiving, assigning, and disposing of fleet vehicles, so that no single individual had total control of these vital functions.
Also, MPD's Fleet Management Division disposed of vehicles purchased during fiscal years 1996 and 1997 without creating sufficient documentation to support removing vehicles from service and disposing of them 5 to 18 months after acquisition. The Metropolitan Police Department must establish an effective inventory system and strengthen internal controls over its fixed assets. Further, the MPD must ensure that its fixed assets are used only for the intended purpose and that their disposition is well documented and complies with existing provisions of D.C. Code, Section 11182.3 and the policies and procedures established by the District's Chief Financial Officer.
Deborah K. Nichols,
District of Columbia Auditor
The following are additional general policies on fixed assets promulgated by the Office of the Chief Financial Officer as set forth in its Financial Policies and Procedures Manual, Chapter V, entitled General Accounting Policies and Procedures:
The District's capitalization4 policy states, in relevant part, the following:
DOCUMENT RETENTION POLICY
On May 18, 2000, the District of Columbia Auditor submitted a draft audit report for review and comment to the Chief of the Metropolitan Police Department (MPD), the Interim Chief of the D.C. Fire and Emergency Medical Services, the Director of the Department of Motor Vehicles, the Chief Financial Officer of the District of Columbia, the Director of the Office of Contracting and Procurement, and the Director of the Department of Corrections. Comments on the draft report were due June 2, 2000. The Metropolitan Police Department requested and received an extension to June 9, 2000.
On June 5, 2000, an exit conference was held with representatives from the Metropolitan Police Department to discuss the draft report. As a results of additional information provided during the exit conference and additional field work conducted, the draft report was revised accordingly. Written comments on the first draft were received from the Chief, Metropolitan Police Department on June 19, 2000.
The Auditor submitted a second draft report to the Chief of the Metropolitan Police Department on July 21, 2000. Comments were due by the close of business Friday, July 28, 2000. As of August 3, 2000, no comments to the second draft were received from the MPD and its first set of comments were no longer responsive to the final report. MPD's initial comments and attachments may be reviewed upon request in the Office of the District of Columbia Auditor.
The Interim Chief of the D.C. Fire and Emergency Medical Services, the Director of the Department of Motor Vehicles; the Chief Financial Officer of the District of Columbia; the Director of the Office of Contracting and Procurement; and the Director of the Department of Corrections did not submit any comments to the Auditor's draft report.
1. MPD purchased six Chevrolet Suburbans for the Fire Department. Funds totaling $202,668 were transferred from the Fire Department to the MPD's budget to cover the costs.
2. Reported to have been assigned to a vehicle whose whereabouts is unknown.
3. Mayor's Order 2000-75, dated May 11, 2000, delegated authority to the Metropolitan Police Department to "procure, acquire, maintain, repair, and dispose of nonemergency motor vehicles. . . "
4. Capitalization is defined as the method used to record the cost of fixed assets.
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