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089822 1 (1971-11-24)

handle is hein.gao/gaobacvtr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE 09 REGIONAL OFFICE 8112 FEDERAL OFFICE BUILDING FIFTH AND MAIN STREETS CINCINNATI, OHIo 45202 NOV 2 4 1971 Mr. W. S. Curley, Superintendent Federal Prison Industries, Inc. Department of Justice Terre Haute, Indiana 47808 Dear Mr. Curley: We have completed an examination of thefinancial statements of the Federal Prison Industries, Inc. 4Z'B ,- Terre Haute, Indiana for the fiscal year ended June 30, 1971. The examination was ma e pursuant to the Government Corporation Control Act (31 U.S.C. 841). Our review, which was completed October 1, 1971, was made in accordance with generally accepted auditing standards and included such tests of accounting records and financial transactions as we considered necessary in view of the nature and volume of transactions and the effectiveness of internal controls. We observed that there was a need to revise certain accounting and other practices which are within your authority ard responsibility. These matters are discussed below. NEED FOR IMPROVEMENT IN ACCOUNTING FOR INVENTORY At the time of our review inadequate control over inventories was pronounced. We found that (1) standard procedures set out in the FPI Accounting Manual were not followed when material was requisitioned from the stockroom; (2) obsolete or excess materials and supplies were charged to production a little at a time rather than reported as excess property; (3) the moving average value of materials and supplies was not always computed after receipt of additional quantities; (4) the inventory contained many inactive items; and (5) variances existed for 30 of 42 items of materials or supplies included in our test counts. 50TH ANNIVERSARY 1921-1971

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