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089791 1 (1971-12-07)

handle is hein.gao/gaobacvtl0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE ROOM 226. 870 NORTH MILITARY HIGHWAY NORFOLK, VIRGINIA 23502 DEC 7 1971 Mr. W. G. Haase, Superintendent of Industries Federal Prison Industries, Inc. 00 p Petersburg, Virginia 23803 Dear Mr0 Haase: We have completed an examination of thelfinancial statements of, the Federal Prison Industries, Inc. (EB-a4---@ Federal Reformatory, Petersburg, Virginia for fiscal ye r ended June 30, 1971. The examination was ma pursuant to the Government Corporation Control Act (31 U.S.C. 841). Our review showed that substantially all financial transactions examined were handled in a satisfactory manner. However, we noted several matters which needed attention. These matters, which were discussed with you, are summarized below together with your comments on the actions taken or to be taken. --The ending work-in-process inventories for the electronic cable shop and the tire reconditioning plant were under- stated because they did not include charges for direct labor and overhead for partially finished units. In addition, the electronic cable shop work-in-process inventory was over- stated by the cost of materials which should have been charged to the raw materials inventory. You stated that the misunder- standings and practices resulting in these mischarges would be corrected. --Our test counts of the raw materials and supply inventories showed that stock card balances for 37 percent of the items tested were incorrect. We believe improvements are needed to achieve more accurate physical counts of materials; also, that improved internal controls over inventories can be achieved by limiting the number of personnel permitted access to storage areas, segregating duties so that persons not responsible for managing inventories take or check the physical counts and using a locator card system for raw materials and supplies inventories. You agreed to improve each of the matters we observed; also, that consideration would be given to using a locator card system for materials in storage. 50TH ANNIVERSARY 1921-1971

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