Examination of Financial Statements of Federal Prison Industries, Inc., Fiscal Year 1976
FOD-77-3: Published: May 31, 1977. Publicly Released: May 31, 1977.
- Full Report:
The primary purpose of the Federal Prison Industries, Inc., a wholly owned government corporation which functions within the Department of Justice, is to give inmates an opportunity to obtain training in marketable skills and avoid idleness through employment.
During fiscal year 1976, the Corporation operated 58 shops and factories at 25 federal institutions. During this year, the Corporation altered its treatment of certain costs which previously were considered administrative expenses. The change was necessary to ensure proper recording of these costs, taking into account the Corporation's reorganization along product lines. The costs related to sales, administration, and production functions will now be accounted for as direct product costs and ultimately expensed as an element of cost of goods sold. Before this new treatment, they were subject to an annual congressional limitation. The change in accounting for these costs had no effect on corporate net income, but factory overhead costs increased by $1,001,029, and administrative expenses decreased from the previous year. The financial statements included in this report present fairly the financial position of the Corporation at June 30, 1976 and June 30, 1975; the results of its operations for the years then ended; and changes in its financial position for the year ended June 30, 1976.