Examination of Financial Statements of the Federal Prison Industries, Inc., for the Fiscal Year 1979

Federal Prison Industries, Inc. conducts industrial operations in Federal penal and correctional institutions to reduce idleness among inmates and to provide training in skills that can be used to obtain jobs upon release. Corporation activities are audited by its own internal audit staff and by the internal audit staff of the Department of Justice. Justice normally makes about 12 audits of the corporation's activities each year. The efforts of the two audit groups are not fully coordinated and there is duplication and overlap in audit coverage. The corporation needs to improve its management of the factories. Problems exist with pricing products, purchasing materials, managing inventory, and recording and reporting manufacturing costs. GAO performed an examination of the financial statements for fiscal year 1979 and a limited review of the statements for fiscal years 1977 and 1978. The Federal Prison Industries' fiscal year 1979 financial statements present fairly its financial position for the year then ended and the results of its operations and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles.