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Audit faults Judiciary’s controls

The Maryland Judiciary has failed to keep adequate inventory records of the Maryland State Law Library’s $12.6 million worth of rare books and art, and judicial-branch employees threw out about $4.7 million worth of computer equipment without first determining if it was salvageable, legislative auditors concluded in a report released Monday.

The Office of Legislative Audits also found – as it had in a 2010 audit of the judicial branch — that some employees had access to the Judiciary’s warehouse inventory of computer equipment as well as the ability to update inventory records, a situation that opened the door to possible thievery.

“[T]hese employees could potentially misappropriate equipment items located in the respective warehouse to which they had access and conceal the related items by deleting such items from the related detail equipment records,” stated the OLA, a division of the state Department of Legislative Services.

Court of Appeals Chief Judge Mary Ellen Barbera —who took office July 6 and saw the report before its release — stated in a July 10 letter to OLA that the Judiciary agreed with the report’s findings and has already taken the office’s recommended steps to correct the deficiencies.

“Employees with routine physical access to warehouse inventory are no longer able to access and update related automated detail equipment records,” Barbera wrote in her letter co-signed by State Court Administrator Frank V. Broccolina. “The user account permissions for access to the automated detail equipment records have been reviewed and appropriately restricted.”

OLA’s report was a follow-up to its 2010 audit of the Judiciary and covers the period from Oct. 19, 2009, through June 30, 2012. The potential misappropriation of equipment was the only problem area identified in the 2010 audit that remained unresolved.

Then-Chief Judge Robert M. Bell’s response to the 2010 audit also said the Judiciary had implemented internal control measures to address potential misappropriation of inventory, including restricting employees’ ability to access and update equipment records. However, the current audit found the problem persisted in some instances.

OLA’s concerns about the State Law Library’s inventory were sparked by the office’s finding that an independent auditor had valued the library’s holdings at $12.6 million while the Judiciary had valued them at less than half that amount.

“Although independent appraisals were performed for some of these items in fiscal year 2011 and all of the items in fiscal year 2012 (and will be performed annually in the future) for insurance purposes, there was no formal process to ensure that all collection items had been accounted for,” the OLA report stated. “Furthermore, even though the July 2012 third-party appraisal valued the library’s art and historical items at $12.6 million, the Judiciary reported a $5.4 million June 30, 2012, value for the State Law Library” to the Department of General Services.

Barbera, in her letter responding to the report, stated that “a formal process has been developed to ensure that Special Collection items in the Maryland State Law Library are accounted for and documented in comprehensive detailed records. The annual inventory appraisals of Special Collection items in the Maryland State Law Library will be periodically reconciled to the detailed inventory records.”

The Special Collection includes the oldest book in the Law Library’s holdings, “An Abstract of All the Penal Statutes Which Be General in Force and Use,” from 1579; Acts of Congress, 1789 to 1791, signed by then-Secretary of State Thomas Jefferson; John James Audubon’s “Birds of America” hand-colored lithographs, which were printed in the 1830s; and “History of the Indian Tribes of North America,” by Thomas L. M’Kenney and James Hall, from 1837, according to the library’s website.

OLA also found that during fiscal 2012 — which ended June 30, 2012 — the Judiciary disposed of about 2,300 pieces of computer-related equipment without following its own written inventory control policies.

“Specifically, there was no documentation to support the items had been formally declared as junk by the property officer or that an evaluation had been performed to determine if any of the items were serviceable for inclusion as an excess property declaration, as required,” the report stated. “Although most of these items had been purchased five or more years prior to disposal and due to their age may not have been serviceable or had other salvage value, we noted many items, such as computers, printers, and scanners, that were less than two years old. However, without an adequate evaluation prior to disposal, it was not possible to determine if all the items should have been disposed of as junk.”

In response to those concerns, the Judiciary has adopted OLA’s recommendation that the Judiciary comply with its “Inventory Control Manual,” Barbera wrote.

The manual calls for all worn or damaged computer equipment to be discarded only after being declared as junk by the property officer. All equipment that is serviceable but no longer needed must be given to DGS’ Inventory Standards and Support Services Division for a determination of the equipment’s appropriate disposition.