Audit of Warehouse Operations

AUDIT OF WAREHOUSE OPERATIONS Page 1 INTRODUCTION

Consistent with the 1998/99 Annual Audit Plan, an audit of the City's Warehouse Operations was initiated in that fiscal period and completed in the current fiscal year. This audit was performed to evaluate changes implemented at the Warehouse since our prior audit, completed in March 1996. A number of findings and recommendations resulted from the earlier audit as included in our Report No.96-002. A major change since the prior audit was the implementation of the inventory module of the new Oracle Finance System. The specific objectives of this audit were to determine whether: Findings from the prior audit were corrected. All goods received or issued at the Warehouse were recorded in the perpetual inventory records. The perpetual inventory records reconciled to the General Ledger control account. Inventory goods were correctly valued on the books of the City. All goods entering the Warehouse were in acceptable condition and properly procured or returned to stock. No goods were removed from stock without proper authorization. All items issued from inventory were charged to the receiving department in a timely manner. Goods in stock were maintained at a cost effective level necessary to support City operations. Excess inventory levels were timely noted and adjusted in accordance with City policy. Goods stored at the warehouse were secured and protected from damage or misappropriation. The environmental conditions and work practices at the Warehouse complied with applicable safety standards. CONCLUSIONS AND SUMMARY OF FINDINGS While changes have taken place at the City's Warehouse since our prior audit, overall conditions have not improved and in some ways have deteriorated. Inventory records are so poorly kept that little reliance can be placed on the accuracy of what items are in inventory, the value of the items, or the value of the inventory as a whole. Users of the Warehouse facility cannot be confident charges...