Audit finds misuse of state resources in Nevada Department of Transportation

State workers in the Nevada Department of Transportation misused state resources and inadequately kept records on material stockpiles, a legislative report found.

The Legislative Counsel Bureau’s audit determined there were ineffective safeguards in accounting for the department’s stockroom purchases and other materials, as well as instances of misuse of state vehicles.

In one example, investigators found “significant discrepancies between physical inventory counts and records” for stockpile materials that were valued at $25 million during the 2023 fiscal year, they wrote. The auditors found invoices were entered incorrectly or not recorded. In other instances, they also found crews’ methods of measuring material loads were inconsistent.

State officials said poor oversight and lack of enforcement can lead to instances of fraud and theft of taxpayer funds.

“Although we did not identify fraud during our audit work, given NDOT’s history of fraud incidents, strong controls are needed in these areas as millions of dollars in parts and materials are purchased every year,” LCB auditors wrote.

In 2013 and 2014, a stockroom employee defrauded the agency with purchases valued at over $250,000 because of inadequate controls over the department’s procurement cards, according to the report. Another 2014 investigation found $35,000 in theft, later known as “tiregate.”

Auditors found the weak controls resulted in workers circumventing purchasing limits, incomplete documentation, inaccurate records and inappropriate approvals, according to the report. One example included a fictitious signature for “Jonny Appleseed” used to skirt separation of duties requirements.

Investigators also say they found low productivity rates and “inappropriate use of state resources,” in agency repair shops – including situations where state vehicles were modified or used for the employee’s personal benefit. Workers in one Las Vegas-area shop spent an average of 2.2 hours per day on work orders, according to the report.

In one instance, crews performed nearly $20,000 worth of cosmetic and performance-based work — such as window tinting, lowering the vehicle, installing matte black wheels and modifying the engine’s power chip — on a 1987 NDOT pickup truck.

“Additionally, the work order notes indicated that staff was to clean, detail, prepare and repair the truck for a holiday party car show,” the auditors wrote. “The supervisor who improperly made these modifications subsequently purchased the unit for $8,200 when it was sold at auction in April 2022. Staff stated this project was a team-building activity, but we consider this wasteful spending.”

Management “eventually became aware” and disciplined those involved, according to the report. It went on to recommend setting policies that outline what modifications are authorized.

Additionally, auditors found one NDOT vehicle was used excessively for personal use — 83 percent of its mileage — during a four-month period in 2023. That use was valued at about $5,000 per year.

“We considered these findings to be abusive and not fraudulent because the use of state funds related to these activities could be appropriate with proper controls in place, including adequate review and authorization,” investigators wrote.

The department accepted auditors’ 10 recommendations to improve control over agency resources, officials told lawmakers reviewing the audit during an interim meeting on Monday. NDOT is required to submit a status report on those recommendations by Oct. 14.

Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.