LAS VEGAS (KTNV) — Nevada Department of Transportation officials are making changes after a state audit found evidence of employees misusing state funds and resources.
In January, the Legislative Commission's Audit Subcommittee released audits for several state agencies, including NDOT, the Nevada Division of Forestry, the Mail Services Division, and the State Public Works Division.
WATCH: NDOT making adjustments after state audit uncovers misuse of funds, resources
State auditors decided to specifically look at NDOT's stockroom purchases, material stockpile management, and mechanic productivity to determine if NDOT has effective controls in place and if management's use of vehicles is appropriate. The audit ran from 2022 through the end of 2023.
"We focused in on this area because of prior fraud investigations that occurred and other audits we've done in the past," said Todd Peterson, Chief Deputy Legislative Auditor. "It has been awhile. I want to say it's been over a decade that we've focused on anything like cost overruns."
Auditors found that controls designed to detect and prevent fraud were not being fully implemented.
One example is lack of appropriate documentation. Of the 150 transactions tested, about 38% did not have documentation showing the appropriate approvals or separation of duties between the requested, purchaser, and approver.
"One purchaser admitted to regularly using a co-worker's name to be the requestor on the documentation. Another individual signed documentation with a fictitious name to avoid controls relative to the proper separation of duties," the audit reads in part. "Additionally, many requisition signatures were illegible, preventing staff from identifying the signatures."
READ FULL JANUARY AUDIT
Auditors found that staff are also not accurately recording parts purchased.
When looking at 41 tire invoices, which totaled almost $25,000, auditors found they were not accounted for in the asset management system and 16 tires were not on the vehicles identified in the invoices. They also found equipment repair shop supervisors do not consistently perform quality assurance program inspections of vehicles, which are designed specifically to detect and deter fraud.
"Four of nine equipment repair shops did not perform any inspections in the calendar year 2022," auditors wrote.
According to the audit, there were nearly $25 million in discrepancies between NDOT records and physical inventory records in Fiscal Year 2023. However, NDOT Director Tracy Larkin Thomason said that number isn't entirely accurate.
"There is not $25 million worth of material missing. NDOT only stockpiles about $12 million to $16 million worth of materials a year," Larkin Thomason said during a Board of Directors meeting in April. "The majority of the discrepancy was a clerical error on glass beads used in striping. ... It was corrected in our system moving forward but when it went to the auditors, they received the raw data and the finished so they didn't see the process in between. That accounts for just under $15 million of the discrepancy."
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Governor Joe Lombardo asked Larkin Thomason where the rest of the discrepancies are coming from.
"It's more of errors in some of how it's reporting and a lot of reporting of stockpiles in the field, like sand, have historically been measured by a maintenance worker out there and it's like it looks about 10 feet tall and about 15 feet long and multiplying it," she explained. "In the last two years, our maintenance division asset management is looking at a couple of apps. In the last year and a half, we've been transitioning to a phone app where they can walk around the stockpile and we're hoping that gets us closer because when you go out, it's a very imprecise measurement."
Larkin Thomason also explained the way discrepancies are measured vary between state auditors and NDOT, which they are working with state auditors to fix.
In the January audit, state officials also found some funds were being used inappropriately. For example, one equipment repair shop performed "questionable and inappropriate modifications totaling nearly $20,000 on a 1987 NDOT pickup truck." Those inappropriate alterations included window tinting, matte black wheels and low-profile tires, an engine modification power chip to enhance the vehicle's performance and a drop kit to lower the vehicle.
"Examples of questionable work included performing preventative maintenance on the unit when there were no miles between services," auditors wrote. "Additionally, the work order notes indicated that staff was to clean, detail, prepare and repair the truck for a holiday party car show. ... Staff stated this project was a team-building activity, but we consider this wasteful spending."
Auditors also noted that productivity at shops varied significantly between equipment repair shop locations and in many cases were below NDOT's standards. For example, at the equipment repair shop in South Las Vegas, auditors found employees only spent about 27% of their work hours on work orders. The NDOT standard is at least 80% of hours should be on work orders.
Larkin Thomason said that is also being addressed.
"One of the things that we are looking at is to ensure that everyone is actually documenting their time the same so that we're not comparing apples in one to oranges in another one, so that the productivity is we are truly getting a measurement of what's there, the direct costs and indirect costs on there," she explained.
Auditors gave NDOT 10 recommendations on how to implement changes and/or fix issues they identified, which NDOT accepted and are in the process of putting in place.
In April, NDOT released their 60-day plan for corrective action, which elaborates on some of their updated procedures. A six-month progress report is scheduled to be released by October 14.
You can read the 60-day report below.