Document zzXwg4r1KxNL55ejajY36dvqm

Sk / ' y yv^u CM :.: uA To: Hr, G. A, Forienza,. ' *e si dent Date: Juno* 2r , ..., B Organic Chemicals. Division Location: Bound Brook * Reference: From: Operations Audit Department location: Clifton' Extension: . Subject: operations Audit Report Chicago, Illinois Plant May 1978 .......... I` Copy to: j.!r . G-. P. Bywater' Mr. R-. Drain Mr c T. P.-Forbath Mr, H'. C. Gaffney Mr, R. D. Reisman Mr, k s 1, von Gl&hn P.M ,K, ?> Co, (2) ~ MA - CO - ha' 7 - MG C - NA BB " NA JUH t 0 i87S ' Ml g ) 1878 Attached, is a copy of .the. May 1978 Operations Audit Report covering the Chicago,.Illinois Plant. We *will be glad to furnish you with any additional infor mation you may require regarding this report. SHIisdk ' Attachment D.^H. HosierDirector Audit and Financial Reporting KTSWBS5a9CBi5Ktj;-^T!!; N12662.01 rvwT 1; |;:i;:J: ! eCU -iR Mr, G ,, A., Forlenza, President Organic Chemicals Division Chicago, Illinois Plant Audit May 3.978 ec Mr, G,, Pc Bywater - NA Mr, R. Drum - CO Mr. T- P. Forbath - NA Mr. H. C. Gaffney - MG Mr. R. D. Reisman - NA Mr. R. L. von Glahn - BB P.M.M. Co. (2) - NA Scope of" Work Performed Our review covered operations, proceduresi and controls over Produc tion and Inventory Control, Purchasing, Payroll, and Shipping proce dures . Review of Internal Control Nothing, other than what is stated in this report, came to our attention which would Indicate inadequateor unreasonable - controls. Audit Report Content Findings andsuggestions are categorized into (I) Specific Requests Frost-Division Management, (II) Operational Findings, and (Hi) Other Findings,, '' -^ The'Information in this report was discussed with Mr.Gaffney,, Reply Your reply to the observations-and suggestions' should be.issued to the Director of Audit and Financial Reporting at Wayne with copies to the Corporate;. Controller at Wayne,' and the Manager of .Operations Audit at Clifton by July 28, 1978. Please indicate whether each suggestion has been (a) accepted and implemented, (b) accepted, but not yet implemented, or (c) rejected." Appropriate.explanations should be furnished for (b)' or (c), as well as. estimated dates of implementation on (b) items. . This review, was conducted by Messrs. E. H. McCfae and D. Segal .who wish to acknowledge the cooperation' and courtesy of all personnel contacted. OPERATIONS AUDIT-DEPARTMENT rvwT 9i-nnnfiiift7 IT 2- -TM SECTION 1 - SPECIFIC REQUESTS FROM DIVISION MANAGEMENT There were no specific requests from division management to 'reviewareas beyond the scope of our regular audit work. SECTIOM II - OPERATIONAL FINDINGS A. PURCHASE ORDER FILE ' The. Purchasing Department maintains a purchase-order file which included 92 purchase orders, with-no indication of whether the orders 'were open or closed. Additionally, vendor packing lists are not forwarded to Purchasing by the Receiving.Department. ' We recommend the purchase order file be purged and, hereinafter, include only open purchase orders. We further recommend that the Receiving Department forward the vendor packing slip and a copy of the'receiving report to Purchasing immediately after- they have processed the receiving documents. B, DAILY PRODUCTION RECORDS - ACTUAL COST DATA At month end, actual inventory usage is adjusted to- standard.and is then posted to the general .ledger. This is: done because of a general lack of reliance on the daily production records submitted by.the- plant foremen. This tends to lessen the effectiveness of the standard; cost -system,. "* We. recommend that the need for accurate daily production records be communicated, to the plant foremen and that significant differTM ences that arise in the routine comparison between standard and actual usage be investigated. C. FIXED ASSETS INVENTORY The plant8 s fixed assets' are not numbered, or tagged and have not been inventoried since the plant's acquisition in 1972. We recommend that the fixed assets be tagged and that a physical inventory of these assets be taken annually. D. . SLOW MOVING INVENTORY . . Slow moving inventory valued at approximately $25,000 and primarily composed of special orders by a former customer has not been adequately reserved. The last sale, was made in October 1977 and the Sales Department has been unable to find other customers. We recommend that an adequate reserve be provided for this inven tory. CYWI 24-0006588 E.,, DUPLICATE INVOICE STAMP All ..vendor invoices are. sent in .duplicate to Wayne for payment, but the duplicate: invoices are? not stamped or otherwise noted as being duplicates. .. ... To assure that these invoices are not - inadvertently paid twice', -we recommend'that all duplicate invoices be- stamped ''Duplicate Do Not Pay" prior to being sent to Wayne. Local management has agreed to implement this recommendation. . ' SECTION 111 - OTHER FINDINGS A. REVIEW OF PAYMENTS '- A review was made of selected accounting records, expense state ments, reserves^ accounts payable, and. Other appropriate documents to-determine the existence of possible improper payments.' We found no evidence of Improper payments. B. REVIEW OF PRIOR AUDIT FINDINGS " We reviewed the August, 1S74 audit findings and found that all suggestions have been implemented. a CYWI 24-OOOS5S9 "T Gc-' TTI 3^TuaBB9l*S^:55I!E!KTO3^3I; N12662.02 " r:YWfy` M-OOOSRQO I