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We have completed our survey of the Center's accounting and
physical controls over equipment, supplies, and spare parts inven-
tory. The controls appear to be generally adequate. Accordingly,
we plan no detailed review in this area or higher level reporting
on the survey results. However, we are bringing to your attention
our observations concerning unexplained inventory adjustments.
To bring recorded inventory balances into agreement with phy-
sical counts, the Center makes sizable adjustments without fully
understanding why the counts and records disagree. This lack may
deny the Center's management knowledge to improve its inventory
processes or prevent the detection of fraud and abuse. During fis-
cal year 1980, the Center made about 10,000 adjustliients that increased
and decreased its recorded inventory in amounts totaling about $33
million. Researchers had identified reasons for about 5,600 of the
adjustments; but, in most unexplained adjustments, the research does
not fully cover records and documents available at the Center, even
when the discrepancies are large.
In one case, the Center reduced its recorded balance for a
turbine blade by $238,751 without learning what caused the discrep-
ancy. Researchers examined several registers and listings but did
not examine the Center's other pertinent records on unconfirmed
shipments and credit suspense items, bin records, procurement master
(943075)
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