Document km4BnYgy8p4G96dQa88zxG3ED

FILE NAME: Thane (THAN) DATE: 1976 Apr 18 DOC#: THAN024 D O CU M EN T D ESCRIPTIO N : Internal Audit of Denver Branch / U C&No.0*CV*:07tt* HAR 000009(2a) SUMMARY OF REVIEW I . FINANCIAL REVIEW We reviewed the Branch Operating Statement as o June 30, 1976 and compared it to same period a year ago. ^ " Comparative F in a n c ia l A nalysis Six Months Ended Ju n e 30 ; ,v 1211 Gross P ro f it (R egular S ales) 24.4 / m ? Other C osts and Income s.iJUb.*' S ellin g Expenses Net Warehouse and D eliv ery A dm inistrative Expenses Total Operating Expenses Operating P ro fit R.O.A.M. The f in a n c ia l s t a t i s t i c s Are si Regular sales have been increase been In c re a se d bj 15 p e rc e n t Gross P ro f it percentage on rj only 1 percent- as coroparedj th e company. breentage of reg u lar s a le s, rc e n t and d ir e c t s a le s have ftmparable period m 1975. The has been reduced, however, by e rc e n t red u c tio n experienced by The accounts re fle c tin ; v e re : . a) Other the s able in d if f e r e n c e s between 19~5 and 1976 v h ich vere lower in a l l accounts p lu s v a ria n c e changed from a .4 p ercen t unfavorto a .7 percent favorable variance expenses were lower p rim a rily due to a reducary expenses from 5.4 p ercen t in 1975 to 4.6 per- II. f l 5 d e b it and 10 c r e d i t s a le s orders fo r co m p leten ess, accu racy , p ro c e s s in g , and ad h e re n c e to company p ro c e d u re . Our t e s t s lis c io s e any s ig n i f ic a n t d e v ia tio n s from p ro cedure. However, th e fo llo w in g s i t u a t i o n was n o te d . The branch s o ld 100 lb . bags o f P & GP ie rc e on a s p e c ia l pro m o tio n to th re e custom ers b u t k e p t th e m a te r ia l in the w arehouse and d e liv e r e d i t as needed. The d e liv e r ie s w ere made by u sin g a B i l l o f L ading a s a sh ip p in g docum ent. HAR 000010(2) Page two Denver Audit 136-010-6 Recommendation: Th'e d e liv e r ie s were properly c o n tr o lle d and adequately c ro s s -re fe re n c e d . However, a s a le s o rd e r T-5017 should have been prepared for each d eliv e ry . The sa le s order should be marked "S h ip p in g P ap ers Only - C ustom er M a te r ia l" . Shipments made during the audit were handled in th is mender. *1 * III. RECEIVING REPORTS ..m s * - **v Our review of a sample of re c e iv in g r e p o r ts processed ^ t g |^ n : , ^ p r i l 10 and May 30 in d ic a te d a problem in th e timeLy p ro c e ssip g ^ f^ d & d u m e n ts . E ig h t o f th e 15 docum ents s e le c te d r e q u ir e d o v er 1 4 ^ g f s processed through inventory. COMMENT; Two o f th e docum ents f o r Warehouse 10C w ere d elay e d due to a la c k o f not id e n tify any o th er unusual circum stances^ c le r k being on v a c a tio n d u rin g p a r t o f caused the problem. The O perations d ate stamp a l l re c e iv in g re p o rts when would have been our recommendation e ra tio n s Manager, id e n tif y w hether t home o f f i c e . o f Potash a t Ve co uld the inventory w hich could have ed th a t the c le rk s t to Kansas C ity . This pon a n a l y s i s by th e Opis a t the branch or the TV. IMPREST CHECKS Our rev ie w o f im p re st ch eck procedural d eficien cies, in our review. May - J u ly d id n o t d is c lo s e any te fo llo w in g problem s w ere i d e n tif ie d We noted two cj ^ C Sf^gjffih ic h th e c o s t o f c i t y d e l i v e r i e s was being c h a r g e d 2165 F re ig h t Expense r a t h e r than 2166, Drayage ___ We s u g g e ste d th a t the O p e ra tio n s Manager ^accounting departm ent to tra n sfe r th e charges to a c c o u n t 2166. We a ls o su g g e s te d th a t the Manager review the im prest checks w r itte n bet^eer* ^and May w hich w ere coded to acco u n t 21*5 to d eterm in e * iy fu rth e r changes are req u ired . charges to ta llin g $155.00 were paid to th e f re ig h t pa>uoct between June S and J u ly 5. _____ NT? The O p e ra tio n s Manager s ta te d th a t th e f r e i g h t payment plan w ill be term inated on August 30, 1976. Sub, ta SupuboAot Cqnfldtfridfoy * J L fiu c ttm A JictowiCo** CwtMtt.iOOCV-IOTOJ* HAR 000011(2a) Page three Denver Audit 136-010-6 V. CREDIT ASP COLLECTION We perform ed an in d ep th review o f th e J u ly 30, 1976 Aged T r i a l Balance w ith the Branch Manager and the O perations Manager. P ro ced u res fo r''th e review and approval o f a l l sa les on open account were e x c e lle n t ,7Th<e'7 Branch Manager i s a c t i v e l y p u rsu in g Che c o l le c tio n o f p a s t d u '-accounts and i s working v e ry c l o s e l y' w__i_th___s_a_l_e_s , _p_e_r_s_o_n_n__e l t_o___m_a_i_n_t_a__in_^_c__u.s..tom er :a in * a c u r r e n t s t a t u s and w it hh ii nn eA sv tf aa bK Il ishI ei a di I c r e d i t Ul immi iht .s . We noted in our re v ie w t h a t some cu sto m e rs had e x c e e d e & i.p r^ itjtH m its because o f th e i n f l a t i o n a r y im pact on th e c o s t o f m e rc ^ a ^ i^ jg ,,12 We a ls o n o te d s e v e r a l in s ta n c e s where a p p ro v a l to exceed o r -i~~ lim it receiv ed over the telep h o n e was n o t docum ented, exceg .a notation on the customer card . jfii Recommendationsi a) C re d it lim its ic a lly and any changes s e n t to th j review and approval. review ed period* m ager o t his b) The Op sending a confirm ation to th elj received over the telephonji.^T m ager should consider anager fo r any approvali V I. INVENTORY MANAGEMENT We review ed th e Ju ly 30, 1976j Manager to id e n tif y those pi shown on S chedule A valued^ and the Branch Manager ii them. *.he Branch M anager and O p eratio n s ch were slow moving. Those items 2 .5 8 2 were i d e n t i f i e d a s slo w moving w ould make a s p e c ia l e f f o r t to s , ; l l We a ls o n o te d t h a t t lower turn than ac processing the in u n til the re c e i prepared. r i a t e i n warehouse IOC was r e f l e c t i n g a rie n c e d . T his was due to th e s a le s o rd er t r a n s f e r betw een IOC and 10A b ein g d elay ed and p ro d u c tio n o rd e r f o r w arehouse IOC were ____a t i o n : The s o le s c r d e r to t r a n s f e r th e p-ro be- ^warehouse IOC iOA ct.ould be p re p a re d a t th e time nerch-tndire i s p h y s ic a l ly *-/'?d. VII. We conducted a s a f e ty in s p e c tio n o f . t h e b ranch and rev iew ed a p p ro p ria te ' docum entation. The follo w in g e x c e p tio n s were n oted: 1. A sbestos f ib e r s were on the f l o o r where the m a te ria l was s to re d . 2. S a f e ty p a l l e t s w ere n o t a v a i l a b l e to move c h lo r in e c y lin d e r s . S lfe. 10 SbiNtblMM a/CoaMentiaJMy A Ordm,Svto. rtW. *A f 0 *%n ACafpsovMtootMO0t ^hC<Vii-.JTa0c3k4* County, MO, HAR 0000l!(2a) Page four Denver Audit 136-010-6 COMMENTS; The fo llo w in g actio 'b c o r r e c te d th e noted d e f i c i e n c i e s . a . The a s b e s to s was so ld th e day a f t e r our a u d i t and removed from the warehouse. vxix. HAROOOOl3(2a)