Report Contents
What OIG Audited
As of July 2022, U.S. Embassy Baghdad, Iraq, managed approximately $164 million worth of U.S. government nonexpendable personal property. The Foreign Affairs Manual defines personal property as property other than land, buildings, and structures, including items such as vehicles, furniture, equipment, appliances, and machinery. Nonexpendable personal property is property that is complete in itself, with a useful life of more than 2 years.
The Office of Inspector General (OIG) conducted this audit to determine whether Embassy Baghdad implemented internal controls to account for and manage the life cycle of nonexpendable personal property in accordance with federal and Department of State (Department) requirements.
To perform this audit, OIG conducted fieldwork at the Baghdad Embassy Compound and the Baghdad Diplomatic Support Center.
What OIG Recommends
OIG offered 14 recommendations intended to improve the management of nonexpendable personal property at Embassy Baghdad. On the basis of the Department’s response to a draft of this report, OIG considers all of the recommendations resolved, pending further action. A synopsis of the Department’s responses to the recommendations offered and OIG’s reply follow each recommendation in the Audit Results section of this report. Responses from Embassy Baghdad and the Bureau of Administration to a draft of this report are reprinted in their entirety in Appendices B and C, respectively.
What OIG Found
Embassy Baghdad implemented key internal controls to account for and manage the life cycle of nonexpendable personal property. Specifically, the embassy designated roles and required separation of duties for personnel involved at each stage to reduce the risk of property loss, misuse, or theft. The embassy also used the Department’s online property management system and required documentation, conducted checks on property it received and designated for disposal, and completed annual physical inventories to account for nonexpendable property at every stage in its life cycle.
However, the embassy did not consistently or completely apply some internal controls and did not fully utilize available analytical tools to manage nonexpendable property. Specifically, OIG found that the embassy did not include all accountable property in its annual inventories and discontinued some property spot checks. In addition, the embassy did not always promptly dispose of property or secure access to the destruction yard holding area. Furthermore, the embassy did not always promptly complete the receiving process or promptly update the locations of items in the Integrated Logistics Management System. Lastly, the embassy did not fully utilize analytical tools when purchasing or replacing property, including when processing 24 furniture orders valued at $12.9 million while $7.6 million of furniture had been available in storage for more than 2 years.
Although from FY 2019 to FY 2022 the embassy encountered unique staffing challenges that contributed to these shortcomings, it also did not always develop, implement, document, and clearly communicate procedures for managing some elements of the property life cycle. As a result, Embassy Baghdad cannot be fully assured its nonexpendable property is managed in accordance with federal and Department requirements and properly safeguarded from misuse, nor that it has the appropriate property to accomplish its mission. In addition, had Embassy Baghdad employed all available analytical tools, it could have prevented unneeded property from being ordered, stored, and going unused.
Report Terms
Report Recommendations
OIG recommends that U.S. Embassy Baghdad, Iraq, establish, implement, document, and communicate, to those conducting the annual physical inventory, a policy and procedures to ensure that the annual physical inventory includes all accountable property at the embassy, as required by 14 Foreign Affairs Manual 416.1.
OIG recommends that the Bureau of Administration reconcile differences between the definitions for accountable property contained in the Integrated Logistics Management System – Annual Inventory Modernization module and 14 Foreign Affairs Manual 416.1 and communicate to overseas posts what property should be included in posts’ annual inventories.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures requiring Accountable Property Officers to conduct periodic physical inventory spot checks of nonexpendable property.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures to secure the keys and limit access to the destruction yard holding area at the Baghdad Diplomatic Support Center to only those people who need access to the area.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures requiring that, upon receipt, all (a) nonexpendable property is promptly inspected, documented, and affixed with a barcode label and (b) identifying information is added into the Integrated Logistics Management System – Asset Management module in a timely manner.
OIG recommends that U.S. Embassy Baghdad, Iraq, take actions to ensure that all existing property in storage facilities has been (a) affixed with a barcode label and (b) added into the Integrated Logistics Management System – Asset Management module.
OIG recommends that the Bureau of Administration conduct a review of the integration of the Integrated Logistics Management System – Asset Management and the Computerized Maintenance Management System to ensure that all updated information is being communicated between systems.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures to designate sufficient staff with access to the Integrated Logistics Management System to maintain continuous property management operations in each office responsible for managing nonexpendable property.
OIG recommends that U.S. Embassy Baghdad, Iraq, determine (a) how much of the nonexpendable property associated with the 24 residential purchase orders made from 2010 to 2021 was used, how much remains in storage, and how much has been disposed of, along with the reasons for disposal, and (b) whether the questioned costs of $12.9 million expended for their purchase were necessary and reasonable.
OIG recommends that U.S. Embassy Baghdad, Iraq, determine (a) how many of the 15,785 nonexpendable property assets, valued at $7.6 million, were used, how many remain in storage, and how many have been disposed of, along with the reasons for disposal, and (b) whether maintaining these 15,785 assets in storage is necessary and reasonable.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures, consistent with 14 Foreign Affairs Manual 412, to require that personnel responsible for purchasing clearly demonstrate a bona fide need supporting the purchase of nonexpendable property.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures for nonexpendable property reordering, consistent with 14 Foreign Affairs Handbook-1 H-419.1(a) that prevents the embassy from carrying an excessive amount of nonexpendable property, establishes a reasonable stocking level, and limits replenishment orders to only maintain that level.
OIG recommends that U.S. Embassy Baghdad, Iraq, develop, implement, document, and communicate a policy and procedures to require the use of the Integrated Logistics Management System – Analytics module to manage and utilize existing nonexpendable property at post and to properly plan the procurement of nonexpendable property that the embassy needs.
OIG recommends that Embassy Baghdad, Iraq, in coordination with the Bureau of Administration, develop, implement, document, and communicate a policy and procedures to provide information and periodic training to U.S. Embassy Baghdad staff who manage nonexpendable property on the capabilities and proper use of the Integrated Logistics Management System – Analytics module to ensure that the embassy efficiently manages and utilizes existing nonexpendable property at post and properly procures nonexpendable property that the embassy needs.