Summary of Report 01-032

June 2001

Report Number 01-032

The results of our statistical testing at four agencies and universities indicate that state property with a total book value of $12.8 million may be missing. While the percentage of missing items at each of the four entities meets limited available standards for acceptable property loss, improvements in property management procedures could reduce the risk of loss or theft of state assets. The percentage of missing test items varied from 1.7 percent at the Department of Human Services (DHS) to 3.8 percent at both the Department of Mental Health and Mental Retardation (MHMR) and The University of Texas Medical Branch at Galveston (UTMB). Notably, the percentage of missing test items at Texas A&M University (Texas A&M) was zero, indicating that we were able to find or account for each of the property items in the sample we tested there.

The range of results from our testing suggests that agencies and universities would benefit from the establishment of a state standard or benchmark for reducing property losses and measuring management of the State's $7 billion property inventory. In May 2001, the 77th Legislature included within the General Appropriations Act a provision that requires agencies and universities to meet current American Society for Testing and Materials (ASTM) standards for minimizing property loss. These standards are quite broad and apply to a variety of industries ranging from construction to manufacturing. For this reason, we recommend that the State Office of Risk Management analyze the State's property loss data in relation to this criteria during the next two years to assess whether modifications are needed to tailor the benchmarks to state entities.

• The four entities' projected property loss based on statistical sampling, in comparison to the total book value of inventory, were as follows:
  

• From the sample of inventory tested, DHS, UTMB, and MHMR were missing certain computer and electronic equipment such as a video conferencing system, desktop computers and laptop computers. Those items had individual book values ranging from $734 to $5,121
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• To reduce the risk of property loss, agencies and universities should: increase monitoring of high-risk assets, ensure that appropriate personnel have adequate training in property management procedures, and hold individual departments within their organization accountable for meeting benchmarks for reducing property loss.
  

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