Richmond city warehouses in disarray due to lack of oversight: audit
VENN
RICHMOND, Va. (WRIC) -- Richmond's city warehouses were found to be in disarray due to a lack of oversight, per a new audit report, leaving the city open to fraud, waste and abuse.
The Office of the City Auditor (OCA) has been looking into how Richmond manages its city warehouses.
In late 2024, Richmond's Office of the City Auditor (OCA) audited both the Department of Public Utilities' (DPU) Main Warehouse and its Wastewater Treatment Plant Warehouse. Auditors discovered these warehouses were poorly managed, reporting wildly inaccurate inventory totals and overall presenting a “significant risk of error, fraud and waste” to the city.
On Friday, Nov. 21, the OCA released an audit report detailing what it called its "Final Phase" of this investigation. This included a review of the city's remaining warehouses, which are managed by the Richmond Police Department, the Richmond Fire Department, the city's Department of General Services and its Department of Parks, Recreation and Community Facilities.
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The OCA said that, throughout the auditing process, both city leaders and individual departments have been very receptive. The agency added that some improvements have already been made at the warehouse level.
However, the weaknesses that remain are extensive, leaving the city at a higher risk of fraud, waste and abuse, according to the OCA.
City has no centralized system, nor guiding policies
Auditors discovered that the city not only lacks a centralized inventory management system. Because of this, the ways that records are kept varies across departments, with auditors learning that they rely on "a mix of spreadsheets and systems that are used inconsistently."
For example, neither the Richmond Fire Department or the Richmond Police Department has an inventory management system. Richmond Fire uses spreadsheets to track inventory, while the Richmond Police tracks some items -- but not all -- using a Records Management System.
The city has also failed to establish centralized inventory management policies for employees to follow, meaning policy decisions are also left up to individual departments.
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Richmond's Fire and Police departments have no inventory management policies at all, while the departments of General Services and Parks, Recreation and Community Facilities have policies that only cover some facets of inventory management.
Auditors said that that this lacking oversight is a major gap that needs to be addressed.
"This gap has led to systemic weaknesses, including unreliable records, higher risk of theft or loss, stockouts and overstocking and duplicate orders," the OCA said. "It also limits the City’s ability to compare and monitor activities across warehouses, which reduces transparency and accountability."
What sort of issues does this gap cause?
Across the board, auditors found that departments' inventory records were "frequently" incomplete or inaccurate, that data standards were inconsistent and that inventory counts were not routinely performed or documented. Their actual stocks tended to vary wildly from their kept inventory records.
There was a noted imbalance in how some items were tracked across departments. Per the OCA, vital information -- like serial numbers, item costs and even item labels -- were missing from many items.
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Other items had multiple, conflicting records. For example, the OCA identified units of bleach that were tracked under differing names across departments, including "bleach (1 gallon,)" "pure bleach 1 gallon" and "clorox bleach."
"Clear and consistent item descriptions are essential for accurate identification and efficient reconciliation during inventory counts," auditors said.
Additionally, in several instances, less critical items got notably more attention from employees than critical ones, "indicating that tracking efforts are not aligned with item importance," the OCA said. Among these neglected items were critical Richmond Fire and Richmond Police equipment.
Auditors also found that separate departments often end up needing to order the same sorts of supplies -- and because there is no central inventory system, the city cannot coordinate bulk purchases to secure better deals, which would result in a "measurable cost savings," the OCA said.
More than that, since there's no way to see citywide inventory levels, the city may be overbuying supplies in the first place.
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"Physical controls and clear accountability reduce the risk of undetected theft or loss, shortages of critical items and unnecessary purchases of items already on hand," auditors said. "Until inventory is counted, formally recorded and kept accurate through routine processes, management cannot rely on inventory data to support decisions or detect irregularities."
The OCA stressed that it is important to have dedicated, trained staff overseeing warehouse operations -- especially if improvements like the ones auditors recommended are implemented, as adequate staffing will be needed to support said changes.
However, multiple departments do not have dedicated warehouse staff, the OCA said. For example, the Department of General Services relies solely on two individuals in leadership roles to oversee custodial inventory and supplies. While Police and Fire do have dedicated staff, they are largely employees with other job responsibilities.
Auditors said that the city needs clear roles, consistent procedures, reliable data and ongoing oversight if it wants to effectively maintain its inventories.
"The current environment lacks key control elements, including control activities, monitoring and risk assessment, that are needed for operational efficiency, financial accuracy and compliance," the OCA said.
Auditors' recommendations to close the gap
Auditors made a total of seven recommendations. Notable recommendations include:
- The city should conduct a citywide inventory assessment and cost-benefit analysis to determine the appropriate level of inventory controls needed.
- While working on #1, more immediately, the city should implement interim standards in several areas, from standardized inventory tracking and recordkeeping to proper documentation and retention.
- The city should create a centralized inventory management system.
- The city should develop and implement a citywide monitoring and accountability process.
Five of the seven recommendations are considered "high priority," or urgent.
The city agreed with all of the OCA's findings and its recommendations. Within their attached response to the audit, Richmond leaders said that the citywide inventory assessment team should be established by Dec. 15, while the interim standards plan should be completed by Jan. 16, 2026.
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To read the full 40-page audit report, click here.
