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B-114826 1 (1972-04-14)

handle is hein.gao/gaobaagmi0001 and id is 1 raw text is: UNITED STATES GENER WASHINGTON, 2 48 GENERAL GOVERNMENT7Q-i/ / APR 14 1972 B- 1148 26 L060 Dear Mr. Carlson: LM096600 Our examination of the financial statements of Federal Prison 1nd7stries:, Inc. (FPI), for fiscal year 1971 was com- pTfd_-Yo-n the issuance of our report dated December 14, 1971, to the Congress on the financial condition of FP1. Our opinion of FPI's financial condition was based on examina- tions at the central office in Washington, D.C., and at seven institutions located at Allenwood, Pennsylvania; El Reno, Oklahoma; Lewisburg, Pennsylvania; Petersburg, Virginia; Sandstone, Minnesota; Terre Haute, Indiana; and Texarkana, Texas. During our examinations we observed certain practices which required the attention of local officials. rF1-se prac- tices weTrought tbtheir attention, and copies of our let- ter reports to these institutions were made available to you. The Assistant Commissioner, Financial Management Division, has informed us that the local officials have taken or have promised to take the necessary actions. In addition, we dis- cussed the need for the revision of certain central office accounting policies and practices with your staff. Our com- ments on these matters follow. IMPROVEMENTS NEEDED IN ACCOUNTING FOR AND INTERNAL CONTROL OVER INVENTORIES Our examinations at the above institutions showed de- ficiencies in the accounting for and internal control over inventories at several of the institutions. Similar defi- ciencies have been reported in previous years by our Office and by internal auditors of the Department of Justice. Be- cause inventories constitute one of the largest assets of FPI, a continuous knowledge of the kinds and quantities of goods on hand is essential for management to make efficient use of FPI's invested capital. We believe that the actions proposed by members of your staff to alleviate the major inventory problems identified during our examinations are adequate. We believe, however, that all deficiencies in the present inventory system should be identified and that the monitoring of the institutions' 70 s OU BEST AVAILABLE

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