The long-troubled Los Angeles Department of Animal Services failed to collect more than $1 million in dog license fees and effectively keep an inventory of animals under its control, according to an audit released on Wednesday.

Calling the lack of oversight “unconscionable and unacceptable,” City Controller Wendy Greuel announced the findings of her two-year audit at a morning news conference.

“My findings reveal that the department was plagued with lax controls,” Greuel said. “This, coupled with a lack of continuity and management, has created an atmosphere and environment with the potential to jeopardize animal safety.”

Animal Services General Manager Brenda Barnette is committed to making the necessary changes in the department, and will use the audit “as a blueprint for change,” Greuel added.

According to the investigation, over the last two years Animal Services failed to collect more than $1.3 million in potential revenue from dog owners. The department only billed owners who paid the previous year’s balance, and dropped those who didn’t pay from future billings.

The investigation also found that a lack of oversight of contracts resulted in a loss of $41,000 and that there was a $125,000 “unexplained discrepancy” in microchip revenue. Staff members also used cash donations as “petty cash” at some shelters.

“It’s really sad that a department that’s had such problems over a long period of time continues to struggle,” said Los Angeles City Councilman Dennis Zine. “These are issues that need to be resolved now.”

Before the audit was even carried out, abuses at the department were well documented, from misuse of the time-keeping system, to undocumented use of firearms.

Much of the trouble is a symptom of “a revolving door of general managers,” Greuel said. When Barnette took over the department in June of 2010, she became the sixth general manager in 10 years.

“We have the right leadership in place, I believe, to create the best municipal department of Animal Services in the country,” said L.A. City Councilman Paul Koretz. “Our still relatively new GM, Brenda Barnette, has the right background and expertise to lead the department in the right direction.”

“The mayor and City Council are well aware of these problems,” Barnette said in a released statement. “I’m working hard every day to reform this department.”

However, for now, management at all six city shelters is in turmoil.

On Wednesday, the Daily News reported that six captains were placed on administrative leave pending a probe into whether they benefited from informal contracts with vending machine companies. Five of the captains were in charge of operations at the shelters.

At the North Central Animal Shelter, Patricia Ott suddenly became the interim head manager on Wednesday. She’s worked for the department for 16 years.

“New management comes in and they’re going in a direction that we’re not sure of, and I’m not pinning anything on anyone, but we’ve been doing it a certain way for ‘x’ amount of years,” Ott said. “After going through six general managers, do we even look up?”

Citing the economy, Ott lamented the city’s budget cuts to Animal Services, and the increased number of animals that have come through the doors since the recession hit. On Wednesday, Ott had 58 cats to spread amongst 24 adoption cages. Her shelter also houses the largest number of dogs in the city, she said.

It’s no easy task keeping track of all the animals, she added.

“A lot of it was not thoroughly following up on why they appeared to be missing,” Ott said. “My partner and I follow-up the best we can, but without having cameras all over the place, and without having the staff to do inventory three times a day, you don’t know when things go missing all the time.”

During the 2010-11 fiscal year, Animals Services licensed 110,850 animals.

“Animals do escape on occasion. And does someone really want to walk up and tell a supervisor ‘Uhh, it got out on me,’” Ott said. “It happens. And sometimes we don’t know it escapes.”

Greuel, regardless, put the blame on a lack of management oversight.

“We would never drop our kids off at school or a daycare facility where they would not be accounted for or cared for, and we would expect the same type of accountability for those taking care of our animals.”

To view a copy of the audit, click here.