Tavares, FL - Monday, oct. 14, 2013
I read Friday’s Orlando Sentinel article by Erica Rodriguez about the “Lake Schools missing thousands of dollars in equipment” and did my own research. The reports she used are items 7.03 and 7.04 of today’s evening agenda.
Erica based her story on
inventory reports attached to today’s agenda (attached). Although I
like to disclose government fiscal fiascos as much as any watchdog or media
writer, It is my belief that the inventory reports lack details that would
reduce the overstated “$74,000” impact cited by Erica, and the reports are the
problem. As a former internal auditors, I consider the losses cited are
extremely low compared to the total inventory values (which are NOT disclosed),
and they are shown at original cost, and not depreciated value or market value.
Here is the article (which is also attached).
The relevant Oct. 14, 2013 6pm agenda and documents for agenda items 7.03 and 7.04 can be found in the Board Docs section of the School District website: http://www.boarddocs.com/fla/lake/board.nsf/Public (Their stupid online BoardDocs software does not provide direct weblinks to pages, so you have to click the dated agenda to find them).
I tracked the inventory reports down on the agenda, and the reports are incomplete, leading Erica to jump to conclusions using the original costs.
- First, the reports SAY they are “Audits”, thus Erica used that term, even though you say it was not an “audit”. The report terminology needs to be changed if you don’t want these referred to as audits. “Inventory report” might be better.
- Secondly, she should be using depreciated or market costs for her “loss” figures, not original costs. However, the reports don’t include depreciated balances or market values, and they should in order to prevent mis-interpretation about the current cost impact of lost items. STAFF should really know better and show depreciated values on the reports. (And why is the purchasing manager, rather than an accounting manager, doing an inventory control report?)
- Thirdly, there is no comparison of total items in the IT or Transporation inventory to the “lost” items to get a perspective which should also show the percent of the total inventory items and depreciated costs that were “lost”. For instance, most of the “bus observation” units lost were 4-5 years old, indicating they might be fully depreciated and have no current value. Was it a 100% review, or a statistical sample? How much of the total balance sheet inventory is the “IT Dept. inventory?” or the “Transportation Inventory”?
- Fourth: There are no discussions of why so many bus observation units were missing and had to be written off. The cover memo says they now have a new clerk, but does that mean that no one took responsibility for inventory control before then? Is the problem fixed?
There should be a column showing depreciated value and one showing market value. The totals for either of those would be much lower and more accurate. Tell your staff to add those to the inventory reports so that outsiders don’t jump to the conclusion using original costs. A footnote should also explain which is the more accurate number, and also explain the percent of total inventory the “losses” represent.
The School staff should develop reports that show RESOURCE ratios such as percent of total inventory lost, etc. rather than this very limited format which would be useless in a business world. The above suggestions should be incorporated into future reports to more clearly show the impact of write offs or missing items.
Finally, any CPA would say the losses are immaterial in comparison to full inventory values (once added to the report) and explain what that meant.
If the reports had those points to explain both depreciated costs and materiality and percent of total inventory values, it would reflect a much more accurate picture of the significance of the losses, and reporters couldn’t make a “mountain out of a molehill” so easily.
Creating such reports would also expand the School District credibility in managing resources. Staff need to be encouraged to create management reports that track resources and track performance ratios, not just list activities like “missing” inventory items. Matter of fact, you should give this to
Vance Jochim
Lake County Fiscal Rangers
Chief Fiscal Watchdog
Volunteers Searching for Ways to Improve Local Government Fiscal Management, Efficiency & Effectiveness
PO Box 1042
Tavares, FL 32778
Mobile: 352-638-3578
