oversight

Financial Statements of the Federal Prison Industries, Inc., Sandstone, Minnesota

Published by the Government Accountability Office on 1971-10-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

  :2:    ~      UNITED STATES GENERAL ACCOUNTING OFFICE
                                 REGIONAL OFFICE
                   ROOM 403, U.S. CUSTOMHOUSE. 610 SOUTH CANAL STREET
                              CHICAGO, ILLINOIS 60607




                                                                        O 7 1 71


Mr. William A. Haupt
Superintendent of Industries
Federal Prison Industries, Inc.
Federal Correctional Institution
Sandstone, Minnesota 55072

Dear Mr. Haupt:

     We have completed an examination of the                financial
                                                       statements-
of the Federal Prison Industries, Inc. .4F~,  Sandstone, Minnesota
for the fiscal year ended June 30, 1971. The examination was mae
pursuant to the Government Corporation Control Act (31 U.S.C. 841).

     Our review, which was completed in September 1971, was made
in accordance with generally accepted auditing standards and in-
cluded 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, including
the internal audit function.

     Our findings, which were discussed with you and other officials
at the conclusion of the review, would have no significant effect
upon the reliability of the financial statements for your location.
However, certain observations which are within your authority and
responsibility, upon which corrective action has been taken or
promised, are summarized below for your information.

        1.   Inventory differences disclosed by our August 1971 test
             counts and a review of storeroom requisitions and pro-
             cedures indicated a need for better materials and supplies
             control. For example:

              -A physical inventory count of glove factory and print
                plant materials and supplies stocks disclosed differ-
                ences in five of the seven items checked.

              --We noted that most materials and supplies are not
                maintained in a separate controlled area.




                          50TH ANNIVERSARY           1921-1971
          --In our examination of storeroom requisitions, we
            found that in almost all instances the same person's
            signature appeared on the requisition form as having
            requested, issued, and received the materials, in-
            dicating that there is no separation of these functions
            in the requisition process.

          --We further found that several requisitions shown as
            having been filled in May 1971 were dated June 1971.

        We believe that a controlled area and a separation of
        duties with one individual assigned the responsibility
        of filling requisitions and maintaining the storeroom
        would improve the control over materials and supplies
        stocks.

    2. During our review of fixed assets, we noted that there
       were a number of equipment items which were not identi-
       fied by equipment tags or other type markings. For
       example:

          --Our test check of equipment items included in the
            glove factory inventory revealed that 11 of the 22
            pieces of equipment checked had no identifying equip-
            ment number.

          --We observed that none of the 21 equipment items
            checked in vocational training had an identifying
            number.

        We were advised that equipment tags had been ordered and they
        will be attached to all fixed assets where it is practicable
        to do so. On other items, such as machine dies, numbers
        will be etched or affixed in some other suitable manner.



     We shall appreciate your comments and advice as to the results
of any further action taken on these matters. We wish to acknowledge
the cooperation extended to our representatives by both your civilian
and inmate personnel during our review.

     Copies of this letter are being sent to the Commissioner of
Industries, Federal Prison Industries, Inc., Department of Justice,




                                     2
Washington, D.C.; the Assistant Attorney General for Administration,
Department of Justice, Washington, D.C.; and the Warden, Federal
Correctional Institution, Sandstone, Minnesota.

                                       Sincerely yours,




                                       M. R. Wolf¢n
                                       Regional   nager




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