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Police Department Creates More Risk Associated With Tracking Inventory

Published on July 01, 2021

Denver skyline fading into a red overlay featuring images associated to drug trafficking.

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DENVER – Denver Police made some progress to improve accountability for the cash the department uses to pay for confidential information and evidence, but the department took steps in the wrong direction for tracking expensive electronics, according to a follow-up report out today from Denver Auditor Timothy M. O’Brien, CPA.

“When we first took a look at the Denver Police Department’s management of some grant funds, we found a lot of things going right,” Auditor O’Brien said. “But when we followed up on the recommendations we made last year, it seems the police chose to make some elements of oversight worse instead of better.”

In 2020, the audit team examined the Denver Police Department’s management of High Intensity Drug Trafficking Areas grant funds because failure to comply with federal grant requirements could result in a loss of the grant funds.

High Intensity Drug Trafficking Areas are established by the federal government to coordinate federal, state, and local law enforcement to address large-scale drug trafficking. The Denver Police Department leads the Front Range Task Force as part of the Rocky Mountain region. The task force serves Denver, Adams, Arapahoe, Jefferson, and Douglas counties.

Last year, we recommended the police improve equipment inventory procedures. Instead of tracking more inventory, police officials decided to track only the inventory worth more than $5,000. This reduced their inventory list from 393 in 2020 valued at about $274,000, to three in 2021. In addition to this change, the three items the police chose to continue tracking add up to only a combined value of $4,455.

The Office of National Drug Control Policy says Denver Police must track all assets purchased with the grant money that are worth more than $5,000 and they may track other items that are at high risk of theft or loss. According to the department’s inventory list from 2020, significant portions of the equipment purchased with these grant funds are valuable electronics susceptible to theft or loss — including computers and surveillance equipment.

As of our follow-up, the police department’s inventory tracking efforts are less now than they were during our initial audit. The risks identified in the audit not only remain but are exacerbated.

“If the police aren’t tracking the equipment they are spending tens of thousands of dollars on, they are making it very easy for thieves to get away with stealing directly from the department,” Auditor O’Brien said. “Poor inventory increases the risk of theft or loss, which also can expose confidential police data.”

Our follow-up also found the department did add a reconciliation process twice each year to help improve accountability for the confidential information and evidence funds. Although this is a step in the right direction in organizations with limited personnel — because it limits the risk of fraud or loss — it is not enough to fulfill our additional recommendation calling for regular reconciliation throughout the year.

We recommended more stringent reconciliation processes, such as once a month. To fully mitigate the risk of fraud, waste, and abuse, the police department should have regular, written procedures for independent reconciliation of the cash it uses for confidential information.

The Denver Police Department also failed to either update its collective bargaining agreement or change procedures for reporting overtime. We found only 9% of paid overtime submissions over the past year were calculated down to the minute, as required in the collective bargaining agreement. Instead, officers continue to round their overtime to the quarter or half hour. This means the department may still be overpaying officers for overtime.

Denver Police did improve accountability measures for returning unused cash for confidential information and evidence. The department also improved how it complies with the grant budget reporting deadline and ensured managers request reimbursement only for appropriate expenses.

Overall, the Denver Police Department implemented only five of our recommendations. One recommendation was partially implemented and five were not implemented — and were possibly made worse by the action the department chose to take.

Read the follow-up report
Read the audit report(PDF, 4MB)

Timothy O'Brien Official Headshot