Maryland Correctional Enterprises officials failed to properly investigate more than $1 million in discrepancies involving missing inventory and instead adjusted inventory records to reflect what was on hand, according to an audit released by the Office of Legislative Audits.
The audit found that the agency “did not always investigate and resolve variances between its materials and supplies inventory records and the amounts on hand. Rather, MCE adjusted the inventory records to reflect the amounts on hand without any investigation or supervisory review and approval.”
The agency reported having $10.5 million in supplies and inventory for fiscal 2018, which ended on June 30, 2018.
“The Department of General Services’ Inventory Control Manual requires that all variances between inventory records and the amounts on hand be investigated and that the adjustments to the related inventory records be approved by someone in authority not below the level of Chief Administrative Officer. The lack of documented supervisory review of the investigations and the related adjustments was commented upon in our preceding audit report,” according to the audit.
Reviews of that end-of-year report and other documentation found 89 discrepancies of $5,000 or more.
“Our review disclosed that MCE did not investigate 57 of these variances totaling $1.1 million; rather, MCE simply adjusted the inventory records without any supervisory review and approval,” according to the audit report. “MCE management advised us that it had not investigated these variances due to staff shortages.”
The agency is responsible for creating programs that provide work experience to qualified inmates. The goods produced — which include furniture, metal products, mattresses and print products — are sold to state and federal agencies, nonprofits and religious organizations.
The program must be financially self-supporting.
In fiscal year 2018, the agency reported a net profit of $3.8 million, according to the audit.
The number of inmates employed by Maryland Correctional Enterprises decreased from 2,042 in fiscal 2017 to 1,719 in fiscal 2018.
Initial decreases were attributed to staff vacancies and to an inability to ensure a proper staff-to-inmate ratio, as well as to difficulties in hiring civilian staff and skilled supervisors to oversee metal, upholstery and woodworking trades.
Additionally, a decline in the state’s inmate population has resulted in a decreased need for clothing, furniture, bedding and linens and laundry services.
The agency expected to employ 1,700 inmates in the current fiscal year, 400 short of its goal of 2,100 inmates.
Maryland Correctional Enterprises did not attempt to explain or deny the discrepancies highlighted in the audit. Chief Executive Officer Stephen Shiloh said the agency would investigate future discrepancies and promised that investigations and any inventory adjustments would be approved by management.