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089913 1 (1970-12-16)

handle is hein.gao/gaobacvvh0001 and id is 1 raw text is: CO UNITED STATES GENERAL ACCOUNTING OFFICE REGIONAL OFFICE ROOM 7054, FEDERAL BUILDING 300 NORTH LOS ANGELES STREET Los ANGELES, CALIFORNIA 90012 DEC 16 1970 Mr. Noyes D. Ellis Superintendent of Industries Federal Prison Industries, Inc. Terminal Island, California 90731 0(i~cq1 Dear Mr. Ellis: We have completed an examination of the financial transactions of the Federal Prison Indihstries, Inc. (FPI), Terminal Island, California, for the fiscal year ended June 30, 1970. The examination was made pursuant to the Government Corporation Control Act (31 U.S.C. 841). Our review revealed that substantially all financial transactions examined were handled in a satisfactory manner. We noted opportunities to improve certain practices which were discussed with you and your staff during our examination. These matters are summarized below for your information and follow-up. 1. The employee responsible for opening the mail and preparing a listing of cash receipts was also responsible for'certain accounting functions. You agreed that controls over cash receipts would be strengthened by separating these administrative duties. This change was made during our review. 2. Employees responsible for taking physical inventories had access to balances shown on stock cards. The FPI Manual requires personnel who do not have access to the recorded balances on stock cards to take physical inventories. We feel that the manual requirement is a sound one and contributes to effective internal control. We believe that your memorandum of August 26, 1970, will provide the separation of duties necessary to achieve improved controls. 3. The ending work-in-process inventory for the furniture factory did not include direct labor costs or overhead for partially finished units. It was agreed that a reasonable estimate of the direct labor costs, with applicable overhead, could be made. You advised us that in the future this determination will be made. (4...... LM089913 a I .................. . . ................................ . . . . ....................

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