Definition:  An audit can be defined as a formal periodic examination and verification of records, inventory, processes, policies and procedures to substantiate their accuracy and reliability.

An audit is a formal periodic examination and verification of accounts or records to verify their correctness. In simplest terms, a property audit is an impartial review of the policies, procedures, and actions of an operation to determine whether or not they meet the recognized standards and the agency’s own policies. The process is an audit of the system, not of individuals, even though changes may result in how particular employees should perform their duties. Ideally, audits simply confirm and document a smooth running operation. The basic purpose of conducting a periodic audit is to ensure the continuity of the custody of property. Auditing on an on-going basis will enhance the safekeeping of property and minimize mismanagement. Failure to conduct regular audits enables problems that can easily lead to court cases being lost, loss of public confidence, personnel problems and possible financial loss.  Policy should define when audits are to be conducted, by whom, and the scope of the audit. 

The entire property system should be audited to ensure its integrity and its compliance with management directives and legal requirements.  There are three different types of audits - basic, procedural, and organizational:

• A basic audit determines whether or not legal requirements are being met.

• A procedural audit examines and evaluates the efficiency and effective use of resources.  This also includes attention to procedures and management policies. 

• An organizational audit examines and evaluates an agency’s structure and encompasses plans, policies, and systems.

When practical, an internal audit should be conducted by a person(s) or unit that does not have responsibilities within the evidence operation.  An inspections unit, a professional standards unit, etc. would be acceptable for the auditing procedure.  This avoids an accusation that the audit team had a vested interest in covering up any irregularities.  As an additional safeguard, unannounced inspections or random audits should be held at the discretion of the agency’s chief executive officer.  An external audit performed by non-employees of the agency avoids internal politics and provides a level of independence that cannot be obtained from any internal audit.

One audit method is the selection and review of one case file.  The file is traced through the entire system to the current location.  This method provides verification of the file and accuracy of all related forms.  A second method entails the random selection of an item of property off the shelf.  The auditor would trace it back through the case file again verifying the file and associated documentation.  A third random method consists of the selection of an inactive case file.  The auditor would trace the file through the system to the property, or if purged, verifying that all documentation is correct.  A physical inspection of the last storage place prior to disposal is recommended to insure validity.

Conducting a routine audit sends a message to everyone in the organization that property and evidence is important.  In addition, outside auditors also provide a confirmation of in-house audit success.

As audits and inventories are intrinsic to a property room operation, there are areas of special consideration and assumptions to be made.  Comparisons of descriptions do not always address the internal contents.  If the evidence seal is intact the property system is presumed to be sound.  If seals have been broken to verify contents, they should be resealed.

An audit of a particular piece of property, or the documentation remaining after the property is disposed of, should be able to tell the entire story of the property’s contact with the agency.

It should answer the following questions for an auditor before being asked by a defense attorney:

• Who seized the property?
• Where, and at what date and time was it seized?
• Who documented it?
• Who packaged it?
• Who placed it in the temporary storage locker?
• Who retrieved it from the locker and processed it into the property system?
• Who put it away and at what time and date?
• Who signed the property out for court use, when, and what was the disposition?
•  Who signed it out for analysis, who transported it, who analyzed it and when and with what results, and who transported it back to the property room?
• Who authorized release of the property?
• Who notified the owner to retrieve the property?
• Who released it, and when?
• What identification was obtained from the owner prior to release?
• If the item was destroyed, when and where did it happen, and who witnessed it?
• If the item was diverted to official use, who requested it, who authorized the transfer, and to whom was it delivered and when?
• Did the recipient of the diverted item sign for it?
• If the item was auctioned, is there a paper trail of when, where, and to whom it was it sold?

The following excerpts are provided from the California POST Property and Evidence System Audit Guide - January 2006 to understand the philosophy of conducting routine audits and develop a method for conducting periodic audits and inspections.

An annual audit of property/evidence held by the agency should be conducted by a supervisor/manager or a select group of examiners who are not routinely or directly connected with the control of property and evidence, but are familiar with the agency’s protocol. Unannounced inspections of the property and evidence storage areas should be conducted as directed by the agency’s executive. 

An inspection is conducted to determine whether the property/evidence room is clean and orderly; the integrity of the property and evidence is being maintained; departmental provisions and policies are being followed; property/evidence is being protected from damage or deterioration; employee health and safety is protected; property/ evidence accountability procedures are being used; and property having no further value as evidence is being promptly disposed of. The employee responsible for supervising the property/evidence controller shares a significant responsibility for the integrity of the property and evidence function. 

The purpose of the audit is not solely to verify compliance, but also to identify areas that may need improvement or updating, and to correct procedural deficiencies. In order to investigate these options, the audit team should be briefed by the agency executive as well as the property/evidence controller(s). The final audit report should bypass intermediate levels and go directly to the agency executive.  If problems are present, action should be immediately taken to rectify the situation(s).  Internal corrections are much easier if they are made before an agency is under the scrutiny of the court or media.

The audit process is an audit of the system, not individuals. Audits and inventories simply re-assert a smooth-running operation. The basic purpose of conducting periodic and ongoing audits and inventories is to ensure the continuity of the custody of property and evidence. Audits and inventories, on an ongoing basis, will enhance the safekeeping of property and evidence and minimize mismanagement, which can easily lead to court cases not being filed, loss of public confidence (and that of collateral criminal justice system agencies), personnel problems, litigation, and possible financial loss. 

There should be periodic audits of stored items and completed property transactions. The audit of these transactions should be conducted by examining the case files to verify that notification and release authorizations have been submitted and that a legitimate basis for the release decision clearly exists. These checks ordinarily should apply at least to the more sensitive items, such as firearms, narcotics, currency, jewelry, and other valuables. Audits should be completed:

• on a scheduled basis;
• on a random basis;
• when information is received suggesting a breach of system integrity;
• when there is a change of the agency executive; and
• when there is a change of property/evidence controller personnel assignments.

Strong internal control will enhance the reliability and credibility of the property/evidence room and agency.
It is the responsibility of management to see that a sound system of internal control is developed and implemented.  The agency’s designated inspection unit is responsible for evaluating the controls, determining where they are adequate, reporting weaknesses, and providing suggestions for improvements.  In addition, regular property/evidence room audits and inventories remind employees that the property and evidence function is vital to the organization.

84.1.6 In order to maintain a high degree of evidentiary integrity over agency controlled property and evidence, the following documented inspections, inventory, and audits shall be completed:

a. an inspection to determine adherence to procedures used for the control of property is conducted semi-annually by the person responsible for the property and evidence control function or his/her designee;

b. an inventory of property occurs whenever the property and evidence custodian is assigned to and/or transferred from the position and is conducted jointly by the newly designated property and evidence custodian and a designee of the CEO to ensure that records are correct and properly annotated;

c. an annual audit of property and evidence held by the agency is conducted by a supervisor not routinely or directly connected with control of property and evidence; and

d. unannounced inspections of property storage areas are conducted, as directed by the agency's chief executive officer, at least once a year.

Commentary: The purpose of this standard is to ensure the integrity of the in-custody property and evidence storage system. The inspection is conducted to determine that the property room is being maintained in a clean and orderly fashion, that the integrity of the property is being maintained, that provisions of agency orders or other directives concerning the property management system are being followed, that property is being protected from damage or deterioration, that proper accountability procedures are being maintained, and that property having no further evidentiary value is being disposed of promptly.

The annual audit should be a significant representative sampling of property including high-risk items.

The person named to conduct the inventory should be appointed by the agency's chief executive officer. Under no circumstances should that inspector be appointed by supervisory or command officers having the property function under their control.