State Audit Finds Weak Controls over Computer Inventory in PA School District

• By Dian Schaffhauser
• 10/27/09

A Pennsylvania school district failed to maintain adequate controls over its laptops, which led to equipment thefts, according to a recent audit. The audit, performed by the state's Department of the Auditor General, found that the Bethlehem Area School District maintained inadequate controls over more than $11.5 million of laptop computers. Wagner's investigators also faulted administrators' oversight of an internal investigation related to the drug arrest of a former middle-school principal that cost the district $52,726.

"Bethlehem Area School District's failure to exercise reasonable control and oversight over the district's computer inventory and over an internal investigation undermines the confidence of residents and taxpayers in the district's ability and willingness to conduct its business affairs properly," said Auditor General Jack Wagner. "The repeated lack of oversight adds to the overall picture of weak management in the daily operations of the district and must be corrected for the sake of taxpayers."

The report has been provided to the Pennsylvania Department of Education, the United States Department of Education, the Pennsylvania Office of Attorney General, the Office of the District Attorney of Northampton County, and the Bethlehem Police Department. Wagner said the referrals to law enforcement agencies relate to the potential theft of missing computers, and the referrals to the education agencies are due to the district's potential mismanagement of state and federal grant funds for the district's SKILL21 program. The SKILL21 initiative was designed to place a laptop into the hands of every student of the district.

The audit found inadequate inventory controls--including a failure to develop the district's own inventory schedules, a failure to compare purchase orders to invoices, and a failure to develop a comprehensive information technology policy and procedure manual--contributed to the mishandling of laptops. He also noted that the district failed to immediately report missing laptops and delayed the filing of police reports for 18 months, which ultimately made it difficult for the police department and the Department of Auditor General to determine who, if anyone, stole the missing computers.

Investigators placed the total number of missing laptops of the district at 80, valued at $84,400, based on four reports the district filed with the Bethlehem Police Department from March 2007 to August 2007.

The report offered multiple recommendations to fix the problems, including:

• Implementing an asset management software program to control inventory;
• Developing an IT policy and procedure manual;
• Ensuring that all technology assets are protected by limiting and controlling access to inventory databases, etching district asset tag numbers on equipment, maintaining repair history, and reporting the transfer or moving of equipment;
• Developing a review process to match purchase orders with invoices;
• Performing an annual inventory of computer equipment; and
• Monitoring and reviewing contract agreements with technology vendors.

In a response to a draft of the audit, the school district said, among other corrections, that the audit failed to take into account equipment depreciation. That would put the value of the missing laptops between $18,000 and $30,000, since many were near the end of their lifecycle.