Senate Committee on Indian Affairs Hearing on GAO Report about IHS Mismanagement of Property

On July 31, 2008, the Senate Committee on Indian Affairs held an oversight hearing regarding the U.S. Government Accountability Office’s (GAO) report, “Indian Health Service (IHS) Mismanagement led to Millions of Dollars in Lost or Stolen Property.”   The GAO analyzed IHS property records from fiscal years 2004-2008 and the GAO  identified over 5,000 missing property items with an estimated worth of $15.8 million.

In attendance was Chairman Dorgan (D-ND) and Vice-Chairman Murkowski (R-AK), Senator Tester (D-MT) and Senators Barrasso (R-WY) and Smith (R-OR).

Witnesses present at the hearing were Gregory Kutz, Managing Director of the GAO Forensic Audits and Special Investigations Unit; Robert McSwain, IHS Director; and Fernand Verrier, Former Deputy Director of the IHS Office of Finance and Accounting.  The Committee invited Michael Leavitt, Secretary, Department of Health and Human Services, to testify but he declined.

Mr. Kutz provided a summary of the GAO Report and explained that the missing property items ranged from computer equipment to tractors. Mr. Kutz testified that lost and stolen property had been a problem for more than a decade but it had not been fixed.  He stated that although policies are in place – the missing property is a result of the IHS employees’ failure to adhere to policy and procedures.  Senator John Tester (D-MT) stated to Mr. McSwain, “If there was this kind of incompetence on my farm, people wouldn’t be working there.”

Chairman Dorgan noted that the GAO Report alleged that employees fabricated and back dated documents.  The Chairman asked Mr. McSwain whether these employees would be held responsible for their actions.  McSwain defended his employees by stating they have certain rights and many of the “fabricated” documents were supported by already existing documentation. He responded that IHS is referring the serious allegations about document falsification to the Inspector General for further investigation.

Fernand Verrier, former Deputy Director of the Office of Finance and Accounting, testified about his personal experience with property problems at IHS.   He gave examples of how IHS employees were in the practice of “writing off” missing property, without conducting investigations.

By the end of the hearing, the Committee boiled down the problems to “weak internal controls” and lack of employee accountability for lost items; as well as improper completion and filing of paperwork, especially in documenting disposal of obsolete equipment.  In response, McSwain committed to implementing 9 of 10 recommendations made by the GAO and respond to the conclusions of the report within the 60 day grace period.  McSwain said, “I look forward to a revisit from the GAO.”  The Committee requested for the GAO to follow up with IHS in 90 days for a review of the changes.

To view a webcast of the hearing, please visit the Indian Affairs Committee’s website at http://indian.senate.gov/public/   View a copy of the GAO Report.

Investigators fault IHS on equipment management (Anchorage Daily):
http://www.adn.com/news/alaska/ap_alaska/story/483564.html