"Additionally, management did not adequately reconcile assets to maintain reasonable internal controls" by conducting physical inventories to match computer inventories, inspectors added.

Inspectors wrote that improved controls over such sensitive equipment was needed, which "may prevent inadvertent technology transfers, unintentional use by hostile parties and reduce the risk for fraud, waste and abuse."

Inspectors said they found that contractors conducted reconciliation at that time only for "high-dollar value end items with frequent movement" among the 1.1 million items they were contracted to store. Value of the items is estimated at $404.9 million.

Inspectors wrote that Hill officials told them that contracts with the contractors also allowed them to exclude from the G009 inventory system any obsolete and excess items considered not to have a future demand. But inspectors wrote, "Sensitive material should be periodically inventoried and reconciled with accounting records to maintain asset control until demilitarization and disposal."

Inspectors recommended that Hill and its contractor conduct "a current and complete physical inventory of government-owned material and reconcile the inventory." It also called for such physical inventories to be conducted at least annually, and for any discrepancies to be investigated.

The report said the commander of the 526th Intercontinental Ballistic Missile Systems Wing accepted those recommendations. The report said he would ask the contractor to complete such a physical inventory and reconcile it with computer inventories by the end of May last year. "Any observed discrepancies will be investigated," it said.

The Pentagon has said that the shipment of electrical fuses used in Minuteman missiles was mistakenly sent to Taiwan in the fall of 2006 — before the Air Force Audit Agency performed its inspection at Hill.

It said Defense officials did not realize the parts were missing, despite inventory checks. That realization occurred only when Taiwan complained it never received the helicopter batteries it had ordered. After months of talks, officials finally realized last month that the missile parts had been sent instead.

A copy of the Air Force Audit Agency report obtained by the Morning News is available online at deseretnews.com.

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E-mail: lee@desnews.com or sfidel@desnews.com