BOP Program Statement 8510.02 § 31

control is designed to include the common control techniques

noted above. Since UNICOR industrial activities are so

varied, each location must devise its own system of internal

control incorporating to the extent possible the following common

control techniques:

a. Document Control. An effective internal control system

must include effective procedures for document control throughout

the origination development, approval, review and recording

process. Document control includes:

— accuracy of figures,

— prevention of oversights, and

— an assurance of propriety of all actions being taken.

The principle of double check of all work accomplishments must

be used to the fullest extent possible.

b. Segregation of Duties. Organizational structures must be

designed so that no individual is in a position to control all

aspects of a transaction. For example:

— Accounts receivable personnel should not be involved in

the receipt of cash items.

— Procurement personnel should not be involved in the

disbursement or receiving process.

— Production personnel should not participate in

inventory storage or issue activity.

— Receiving personnel activities should be separated from

the procurement function, stock control record keeping,

and receipt of supplier invoices.

— Accounts receivable personnel should not have an

authority to write-off accounts receivable.

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— Stock record personnel should not have an authority to

adjust inventory records without supervisor approved

documentation.

— Physical inventories should not be taken by personnel

who are immediately responsible for physical or record

keeping control of the inventory. However, when

necessary, knowledgeable personnel may be used to

identify inventory items.

— Inmate-to-inmate handling of accounting documents

should be avoided if at all possible.

Segregation of duties among available personnel is designed to

provide integrity and reliability of results in processing UNICOR

transactions.

c. Classification of Transactions. Classification of

transactions as to accounting code and object class must be noted

on all procurement documents in accordance with an established

chart of accounts. The originator of the transaction makes the

annotations. Accounting personnel then review and verify such

annotations.

The established chart of accounts must be designed to meet

management needs for information and be well-communicated among

operational personnel to ensure consistency in the classification

of transactions.

d. Journal Entries. Standard journal entries are compiled

automatically from transaction level entries and manual journal

entries are prepared by local accounting personnel. Business

Managers must review the results of these entries and make

corrections, if required.

e. Reconciliation of Subsidiary Records. A process of

periodic reconciliation of control accounts or financial records

with documents or other support records produced externally to

the automated system must be included as part of UNICOR's

internal control system. The following are examples of the type

of reconciliations that should be made:

— Accounting personnel are responsible for monthly

reconciliation of cash and OPAC transactions in the

general ledger with the monthly Statement of

Transactions (SF-224).

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— Accounting personnel must make postings to general

ledger accounts after a double check of amounts against

two or more sources, if possible.

— Accounting personnel must review posted inventory

amounts and values daily for accuracy. Test counts are

performed periodically, documented, and compared with

inventory records.

f. Undistributed Expenses. Procedures must be established for

the accumulation of temporarily undistributed expenditures and a

process developed for timely and fair distribution of those

expenditures to appropriate programs, functions, or activities.

For example, the SOI’s salary can rarely be assigned to a

specific job or process. Therefore, that salary along with other

items is initially recorded as an undistributed expense.

Accumulated totals of such expenditures are then distributed

monthly on a predetermined allocation formula to operating

activities.

g. Financial and Cost Statements. Accurate and meaningful

financial and cost statements and reports must be supplied

periodically and be responsive to management needs. All reports

and financial statements must be examined, and initialed by the

Accountant and signed by both the SOI and the Business Manager,

or designee.

— Requirements must be established for using these

statements and reports effectively and UNICOR

supervisors must ensure that staff comply with such

requirements.

h. Estimates or Standard Cost Comparisons. UNICOR managers

must make timely and periodic comparisons of estimates or

standard costs with actual expenditures to:

— identify variances,

— analyze and evaluate those variances for internal

control breakdowns, and

— identify the causes of those breakdowns and recommend

and implement corrective action as appropriate follow-up.

Recommended corrective action must be a part of each UNICOR

location's internal control systems.

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