Warehouse mysteries: Sacramento Utilities Department can’t account for $14,000 in city-owned equipment

An audit of the Sacramento Department of Utilities—in charge of the city’s water, sewer and storm drainage systems—found the agency mishandling its inventory over the past three years.

While the city’s Budget and Audit committee praised the department for making progress, the audit noted $14,000 in tools and equipment was missing and could have been stolen.

The Utilities Department has a total inventory worth $2 million, 40 percent of which was purchased over the past three years. The audit found the department hadn’t used a quarter of its equipment in that time, and noted that some employees had inappropriate access to the equipment, leaving open risks of theft, fraud and abuse.

In one warehouse, more than 330 employees had improper access to equipment. In other instances, logs were incomplete, some tools went untracked and some warehouses were accessible to former employees. New warehouse users weren’t always approved through a formal process, either.

“While the excessive employee access to the Department of Utilities’ warehouses does not necessarily constitute causation for the $14,000 loss of stagnant inventory described above, it demonstrates a potential relationship which may exist,” the audit states.

About $7,500 worth of equipment wasn’t counted, since the warehouses they were stored in weren’t included on the inventory schedule. Counting practices varied with some employees eye-balling measurements while others used tape measures. And if items went missing, adjustments from one warehouse to another weren’t tracked.

As a result, accuracy rates during three surprise inspections came in at 80 percent, 39 percent and 48 percent, all well below the 95 percent target. “As a result, the department may not know what inventory they have or where it is located,” the report reads. The department also “lacks a formal policy that prohibits employees from borrowing City-owned tools and equipment for personal use,” one of the audit’s recommendations.

“[The Department] acknowledges and concurs with the city audit,” Utilities Director Bill Busath told the committee. “As stewards of the city’s assets, we take this role very seriously. Of the 23 recommendations, nine are done and 14 are in implementation.”

Those changes include: Reducing staff’s access to the main warehouse by 80 percent; consolidating inventories from nine to five locations; and improving counting practices.

The auditor’s office is also conducting audits on the city’s medical marijuana dispensaries, the Parks and Recreation Department, and hiring policies. The Police Department will be audited next.