Audit Report

08-07-2017
Improving Financial Management
Followup Audit: U.S. Naval Academy Museum Management of Heritage Assets (Project No. D2016-D000XD-0200.000)
DODIG-2017-107
       

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Objective

We determined whether the U.S. Naval Academy (USNA) Superintendent had implemented recommendations in DoD OIG Report No. DODIG-2012-017, “U.S. Naval Academy Officials Did Not Adhere to Contracting and Gift Policies,” November 7, 2011.

The USNA Superintendent had agreed to direct the USNA Museum Director to:

  • establish written policies and procedures for recording gifts,
  • provide additional oversight and status reports on recording inventory,
  • conduct an inventory,
  • implement and record all gifts into the Naval Heritage and History Command (NHHC) inventory system,
  • assign complete identification numbers to all gift records, and
  • establish access controls to the inventory system to prevent unauthorized modification or deletion of inventory records.

Background

Report No. DODIG-2012-017 identified that in-kind gifts (non-monetary gifts classified as heritage assets that have historical significance) were not properly recorded into the inventory system; a complete inventory of all items maintained by the USNA Museum had never been done; 21,700 of nearly 53,000 heritage assets in the Museum’s inventory system did not have an identification number or a complete identification number; security controls were not established to prevent unauthorized modification or deletion of heritage assets in the inventory system; and the inventory system of the NHHC, which is responsible for preserving, analyzing, and disseminating U.S. Naval history and heritage, was not used.

Finding

The USNA Museum Director implemented recommendations to establish policies and procedures for recording inventory, provide quarterly reports to NHHC, assign identification numbers to items in the inventory system, and establish security access controls to prevent unauthorized modification or deletion of inventory records.

In response to the prior audit, the USNA superintendent stated that a baseline inventory of all heritage assets had been completed in 2014. We requested but USNA museum officials could not provide documentation to support that a baseline inventory was conducted in 2014. We then reviewed their current inventory system to determine when these heritage assets were last inventoried. We determined that 30,857 (50 percent) of 61,693 recorded heritage assets were not inventoried following the issuance of the prior audit report. The Museum officials stated that the museum experienced a complete turnover in management staff since the last audit in 2011, and the documentation was not maintained to support that an inventory was conducted. Using the current inventory system, we also determined that 129 artifacts had been physically transferred to the Smithsonian National Museum of American History, but a transfer agreement was never finalized.

In addition, we identified 270 items that may be duplicates or belong to a group of items that have already been accessioned (accepted by the museum). Furthermore, we identified 45 items that museum officials considered lost; however, museum officials did not complete a DD Form 200 “Financial Liability Investigation of Property Loss” to record those lost items when necessary.

Additionally, the Director has not implemented the NHHC inventory system as agreed to in the prior report. This occurred because he was waiting for system testing and transfer of inventory records to the new system, both of which were scheduled to be completed by July 2017. Therefore, we determined that this recommendation is resolved but will remain open. We will close the recommendation once we verify that the actions the USNA staff takes fully addresses the recommendation.

Without a complete and accurate inventory, the museum heritage assets remain vulnerable to loss and theft. In addition, the inventory reported on the Department of the Navy Balance Sheet, Note 9, “Property, Plant and Equipment,” Section “Heritage Assets and Stewardship Land,” may not be accurate.

Recommendations

We recommend that the USNA Superintendent direct the USNA Museum Director to:

  • prioritize the completion of a baseline inventory of all U.S. Naval Academy Museum assets and document the inventory results;
  • reconcile the USNA Museum Found-in-Collection and duplicate records with already accessioned inventory items, when possible;
  • complete a DD Form 200 for lost assets as the director deems it necessary, or document the reason if the form was not needed; and
  • prepare and complete a transfer agreement for any artifacts that were physically transferred to the Smithsonian Museum. If the permanent transfer of these artifacts is not completed, then these artifacts should be recorded as loaned items in the USNA Museum inventory.

We also recommend that the USNA Inspector General provide progress updates to the USNA Superintendent on completion of the baseline inventory.

Management Comments and Our Response

The USNA Superintendent addressed all specifics of the recommendations. Specifically, to prioritize the completion of a baseline inventory, the USNA requested support, reassigned staff, suspended most public and midshipmen tours, and reduced academic support for midshipmen research papers. The USNA will reconcile the USNA Museum Found-in-Collection and duplicate records and will develop a plan to determine the disposition of items that cannot be reconciled to existing records. The USNA will complete the DD Form 200 when required and prepare a transfer agreement for the artifacts that were physically transferred to the Smithsonian Museum. Therefore, the recommendations are resolved but will remain open. We will close the recommendations once we verify that the information provided and actions the USNA takes fully addresses the recommendations.

The USNA Superintendent, responding for the USNA Inspector General, addressed all specifics of the recommendation requiring the Inspector General to update the USNA Superintendent quarterly on the progress of the baseline inventory. The USNA will periodically validate results through on site verification. Therefore, the recommendation is resolved but will remain open. We will close the recommendation once we verify that the information provided and actions the USNA takes fully addresses the recommendation.


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