Audit finds NDOT stockroom and material controls weak; $25 million inventory discrepancies flagged

The Legislative Counsel Bureau presented an audit on Dec. 19, 2024, finding that the Nevada Department of Transportation (NDOT) lacked adequate controls over stockroom purchases, material stockpiles and some equipment‑repair shops, creating risks of waste or misuse of state assets.

Auditors examined NDOT operations from January 2022 through calendar year 2023 and said material tracking practices and purchase documentation were often incomplete or inconsistent, contributing to large discrepancies between NDOT’s records and physical inventories.

Auditors found that 38% of sampled purchase transactions lacked documentation of supervisory approval or separation of duties; staff admitted signing in coworkers’ names and one used a fictitious name. A week‑long sample showed 146 purchased parts were not recorded in the asset system, a potential annualized loss the auditors estimated at about $440,000. The audit also identified 41 tire invoices totaling nearly $25,000 that were not recorded properly and instances where purchased tires did not match the units listed on invoices.

Material stockpile records showed larger variances. The audit reported nearly $25 million in discrepancies between NDOT’s material tracking system and physical inventory counts for fiscal year 2023, with inventory‑count methods varying by crew (measuring wheels, visual comparison, counting strides) and error rates as high as 9,000% for some items. Auditors noted NDOT procedures for stockpile inventory were outdated or unclear; some guidance dated to 1987.

Mechanic productivity varied widely among repair shops. Auditors reported shops that logged low direct work hours and inconsistent completion of required supervisor quality‑assurance checks of work orders. The audit also flagged instances of inappropriate use or modification of state vehicles — for example, a department pickup reportedly received nonstandard cosmetic and performance modifications later sold at auction to a supervisor — and a NDOT director’s office vehicle that logged 2,700 miles over several months, 83% of which the audit said was personal use.

"Of the 150 transactions tested, 57 did not have documentation demonstrating appropriate approvals or proper separation of duties," Deputy Legislative Auditor Amanda Barlow said in the presentation.

NDOT accepted all recommendations in the audit and officials at the meeting described steps to centralize shop oversight, improve documentation and update policies. Director Tracy Larkin Thomason told the subcommittee the department is modernizing stockpile measurement techniques — including testing phone‑based volumetric tools and drone surveys — and has moved problematic shops to centralized oversight. Mario Gomez, NDOT deputy director for operations and maintenance, said centralizing shops under headquarters improves supervision and consistency.

The subcommittee approved the audit report. Auditors issued 17 recommendations aimed at strengthening purchase controls, standardizing inventory measurement, improving recordkeeping and enhancing supervisor inspections. NDOT said it had already begun updating policies and arranged external help to tighten shop documentation and processes.

Ending: NDOT accepted the audit’s recommendations and said it will standardize inventory procedures, increase oversight of equipment shops and pursue improvements to prevent asset loss and inaccurate billing or reporting.