Texas Department of Transportation
An Audit Report on Inventory Management at the Texas Department of Transportation
November 1998
Report Number 99-016
Overall Conclusion
The Texas Department of Transportation's (Department) materials and supplies inventory records do not accurately represent the quantity and the dollar value of items in its inventory. This inaccuracy is attributed to a lack of accountability for inventory management. While the Department has well-defined policies and procedures, they are inconsistently applied and enforced among districts and individual maintenance sections. However, the Department does provide adequate physical security to minimize the risk of theft and abuse, and it effectively manages its equipment inventory.
Consolidation of district warehouses and reduction of inventory levels create an opportunity for a one-time savings of $18.2 million over the next biennium with subsequent annual savings of $5.3 million. The consolidation would also increase the efficiency of inventory management through various service improvements.
Key Facts and Findings
Over 27 percent of the Department's inventory records do not accurately represent the quantity and dollar value of items in its warehouses. This represents approximately $5.9 million of inventory that is misplaced, misclassified, or overstocked.
The Department is not effective in holding district management accountable for the accuracy of its inventory. This lack of accountability is evidenced by inconsistent performance of annual physical inventories, unreliable reporting of road sign inventory, and inconsistent use of performance measurement data. Achieving established performance goals for surplus inventory would save approximately $5.4 million.
The Department has opportunities for cost savings and service improvements by consolidating warehouses ($5.3 million in annual savings) and reducing inventory levels ($7.6 million in a one-time savings).
The Department has comprehensive policies and procedures and uses them (along with the equipment information system) to ensure that equipment is adequately managed, maintained, and protected from waste and abuse.
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