Every once in a while, I read about something that requires no elaboration from me, so perfectly does it make a point. That's how I felt today when I encountered a story about a city of Los Angeles audit that showed municipal departments could not immediately find more than 100 items they had purchased over the past seven years.
That's right. They couldn't find them.
According to the Los Angeles Times, Controller Wendy Greuel conducted an audit of the Department of Parks and Recreation, the Bureau of Sanitation and the Information Technology Agency, asking officials to account for 254 randomly selected items. The audit found 115 items were not where they should have been, 56 were later found in other locations, and 59 more still have not turned up. Those 59 items include a $60,000 video recorder and account for a combined total cost of $938,000. I shudder to think what the numbers would have been had more departments been included.
But this is no harangue against government waste. Sadly, I think many private companies would fare just as poorly in a similar audit. When I wrote about asset management a few years ago, I cited a FinanceWeek article that said just 40 percent of a company's physical assets are tracked and recorded well enough so they can be easily located. Up to 50 percent of assets are so poorly recorded, it's impossible to prove they exist, while another 10 percent to 20 percent of assets are described, but cannot be found -- suggesting they may no longer exist. Those numbers, scary as they are, mesh pretty well with those in L.A.
The article offered some good advice: Barcode all assets during a physical audit and store the information in an integrated asset register, complete with a detailed description and location information for each asset. It's obviously important to follow through with regular updates of the register when items are sold, scrapped or relocated.