1.Draft Report - Fazilpur PS04

8/2/2019 1.Draft Report - Fazilpur PS04

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DRAFT INTERNAL AUDIT REPORTSTRICTLY CONFIDENTIAL

BACKGROUND INFORMATION

Report title Review of PS04 Fazilpur Station Activities

Auditors Umair Asghar, Muhammad Yousuf NasimStart of Audit October 27, 2011

Close out Meeting November 02, 2011

Draft Report December 22, 2011

Final Report

Follow-up

No part of this document may be reproduced or transmitted in any form or by any means including photocopying,

recording and electronic transmission to a party external to PARCO, without permission in writing from the

Managing Director. Internally it may only be copied with discretion and on a "need to know" basis.


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Internal Audit Department

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TABLE OF CONTENTS Page No.

1. EXECUTIVE SUMMARY 3

1.1 Summary of Observations 3

2. DETAILED OBSERVATIONS, RISKS AND RECOMMENDATIONS 4


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1. EXECUTIVE SUMMARY

Summary of Observations Priority

1 In-Effective Control on Imprest Fund.High

2 Security Controls are in a Perilous Position.High

3 Plant Maintenance Module of SAP should be fully implemented.High

4Maintenance Department should Considerably Improve record keeping and

monitoring of material and manpower consumption on equipment.

High

5 HSE - Smoke Detectors and Multi-Gas-Monitor not present at the station.High

6

Inventory Items lying in open area behind NMPT residence have apparently been

abandoned by the Warehouse.

High

7 Scrap Declaration Practice lacks firm controls.High

8 Inventory Management needs Substantial Improvement at the Warehouse.High

9 Fixed Asset Register does not match with assets present at the station.High

For ease of reference, the risks have been rated as:

High - These issues involve a substantial and direct exposure to loss of assets, loss of revenue

and / or substantially negative impact to operating efficiency and / or effectiveness;

Medium - These issues involve moderate exposure to loss of assets or revenue and / or negative

impact on operating efficiency and / or effectiveness; and

Low - These issues do not appear to have a substantially negative impact on operations or the

control environment, but have been brought to Management's attention for informational

purposes and consideration.

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2. DETAILED OBSERVATIONS, RISKS AND RECOMMENDATIONS

2.1 In-Effective Control on Imprest Fund.

FindingStation maintains an Imprest Fund of PKR. 1,200,000 to meet its daily financialrequirements. Internal Audit made the following observations on physical cash count at

the station as of October 27, 2011.

Cash in Hand: Physically counted cash in hand was PKR. 195,205 which

matches with SAP balance.

Payments and Advances: Total payments as per station record were PKR.

771,601 however SAP balance was PKR. 765,718. Difference of PKR. 5,883could not be substantiated with approved vouchers.

Cash at Bank: Station record shows bank balance of PKR. 383,174 while MCB

bank statement shows the balance of PKR. 381,974. Difference of PKR. 1,200 iswithholding tax appearing on the bank statement.

Monies Recovered from Oil Theft Case: As per station record amount of PKR.

150,000 has been recovered by Station Security from oil culprits, this amount wassitting with Station Accountant since August 07, 2009 in the form of cash,

however it was deposited into PARCO bank account Rajanpur dated February 18,

2010. This amount appears to be part of the station Imprest fund.

Cash advances extended to station staff without settling outstanding balances:

Cash advances to staff should be settled within 7 days of being extended; however there

appears to be no control in place to ensure this rule is being enforced properly.

Following is a list of cases where cash advances have been extended to staff without prior

settlement of outstanding balances falling outside the 7 days period.

Name

Advances to Staff in PKRSettleme

nt (indays)Date PKR

Outstanding

BalanceKhanMohammad

21.07.2011 35,000 Nil 16

KhanMohammad

25.07.2011 40,000 35,000 12

KhanMohammad

11.08.2011 20,000 12,437 9

KhanMohammad

12.08.2011 9,000 17,840 8

KhanMohammad

05.09.2011 30,000 18,437 22

KhanMohammad

09.10.2011 50,000 14,937 16

Ghulam Jilani10.10.20

11 3,000 997 51

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Suffian Qureshi18.10.20

11 50,000 10,585 26Syed AzharHussain

24.10.2011 10,000 13,570 2

Observations on implementation of SAP FI Cash Module at the station:SAP enables recording of movement of Imprest cash using Cash Journal of FI module.Internal Audit made the following observations regarding the implementation and usage

of SAP by Station Accountant:

There appears to be limited training of SAP for Station Accountant to do morethan posting a simple transaction entry. E.g. Accountant cannot run Management

Information Report in SAP to monitor and control the status of Outstanding

Advances extended to staff falling outside the 7 days period.

Payments and Advances made through Cash Journal of SAP are also recorded in

a manual register.

Receipts from CHQ are updated in the Cash Journal however a manual register is

also maintained for the same. Expense summary is prepared manually to claimreimbursements from CHQ.

Risk / Impact In-effective use of company ERP system - SAP.

Duplication of Work in absence of full implementation of SAP.

Imprest Fund exposed to abuse in absence of proper monitoring and controls on

finances at the station.

Recommendation SAP should be fully implemented with training given to Station Accountant.

Cash advances to staff should be monitored by Station Accountant using

Outstanding Balance Report generated by SAP, advances falling outside the 7days range should be chased for timely recovery and flagged up to Station In-Charge if there is an issue.

Monies worth PKR. 150,000 recovered from oil theft case should be deposited

with relevant authorities in PARCO.

Manual booking keeping should be discontinued by fully implementing SAP.

Priority High

Management

Comments

Manager

Responsible

Manager Finance

Implementation

Date

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2.2 Security Controls are in a Perilous Position.

Finding Internal Audit made observations on Security Practices at the station which are not incompliance with Standard Operating Procedures and Key Point Intelligence

Division directives. These are listed below:

Non-Compliant Practices:

No

Non-Compliant Practices

Non-compliance

ofSOP/KPID**

1

Contractual labour hired for less the 3 monthstime period is not given a Visitor Card to bedisplayed on the chest, instead a paper slip fordays between 10-20 days is issued with whichstaff can move in and out of the station premiseseasily.

SEC-SOP-010

2

Main Gate Security Guards do not search staffworking on the station for prohibited devices likemobile phones, cameras and firearms assumingthat this checking will be conducted on the PlantArea Gate by Safety Team however it wasobserved that this gate remained wide openduring daytime working hours without anyhindrance and checking of people entering andleaving the Plant Area.

SEC-SOP-004& SEC-SI-001

3 Watch Towers are not manned by armedguards at the station at any given time.

KPID

4 There is no CCTV camera installed at the station.

KPID & SEC-SI-

001

5There is no Automated Barrier Gate at thestation. KPID

6Patrolling does not take place along theboundary wall of the station both from inside andoutside.

SEC-SOP-004

7There is no record of a Weapons Register at thestation. SEC-SOP-002

8 Arms License is not in the custody of StationSecurity In-Charge. SEC-SOP-002

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9

It has been observed that certain PARCO andcontractual staff do not wear and display theirEmployee Cards while on duty, including SecurityGuards.

SEC-SOP-004

10

Patrolling of station premises during night is

"not" taking place 4 times per night, which is therequired frequency.

SEC-SOP-004

**Key Point Intelligence Division

SOP Description Doc NoRevNo Rev Date

Security Measures for Stations &Terminals

SEC-SOP-004

210.03.2011

Security Instructions for Stations &Terminals

SEC-SI-001

101.10.2010

Weapons Inspection for Station &Terminals

SEC-SOP-002

108.03.2010

Contractor Movement Control forSecurity for Stations and Terminals

SEC-SOP-010

1 21.09.2010

Observations:

10 gate passes randomly tested, out of which 1 had entry missing from the In-

Out Register for material, however record of Gate Pass and Dispatch Advice

was found on the main security gate.

On night shift duty one security guard goes on patrol while the other stays atthe main entrance gate, whereas there should at least be 2 guards present at the

main gate at all times. 2 out of 10 Amano Watch Patrolling Devices are dysfunctional on the

following locations:

Grid Station.

WOPP Main Gate.

Security Guards do not wear proper uniform, in one case guard on duty wasfound wearing Shalwar Kameez.

2 Nos Walkie Talkie used for communicating between security guards is not

functional; instead communication while on patrol is relied upon personalmobile phones.

1 out of 3 search lights used for patrolling is dysfunctional. Barbed wire on the station boundary wall broken between:

South West and South East Watch Tower.

North East Watch Tower and Main Gate.

Dummy human figures erected on South East and South West watch towers

during summer of 2011, however their debris still lying inside the tower withno apparent use at present.

Risk / Impact Safety and security of station staff at risk.

Risk of a Security Breach resulting in damage/loss to PARCO property and

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Recommendation Recommendations are based on observations made to ensure compliance with Security

SOPs and Key Point Intelligence Division directives.

Contractual labour hired for less than 3 months should be issued a proper

Visitor Card for work inside the station premises.

Security Guards at the Main Gate should thoroughly search all people

coming inside and leaving the station premises for prohibited items.

Watch Towers should be manned with armed guards at all times.

There should be a CCTV camera installed at Main Gate to monitor the

movement of material, vehicles and personnel coming in and leaving stationpremises.

An Automated Barrier Gate to be installed at the Main Gate.

Daily patrolling along the boundary wall of station should be enforced, both

inside and outside. The following equipment should be fixed on priority basis:

Equipment NameQty

Amano Watch PatrollingDevices 2

Walkie Talkies 2

Patrolling Search Lights 1

A minimum of 4 patrols per night shift should be enforced with at least 2

Security Guards present on the Main Gate at all times. All staff (PARCO and

contractual) present at the station premises should display their EmployeeCards on chest during duty hours.

Weapons Register and Arms License should be maintained at the station.

Damaged barbed wires on boundary wall of the station should be repaired.

Proper and complete uniforms to be worn by security personals while on duty

with Employee Card clearly displayed on the chest.

Key Point Intelligence Division Instructions should be fully implemented at the

station for compliance with Ministry of Interior requirements.

Priority High

Management

Comments

Manager

Responsible

Manager Security

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Implementation

Date

2.3 Plant Maintenance Module of SAP should be fully implemented.

Finding As it stands, the Plant Maintenance Process is following, step-wise:

Plant Maintenance ProcessMetho

dLocatio

n

Notification issued by Planning Engineer at CHQ. SAP PS01

Work Order raised by Planning Engineer at CHQ. SAP PS01

Planning Engineer from PS01 Korangi emails WorkOrder list to Maintenance Staff.

Manual PS01

Work Order List printed by Station MaintenanceStaff.

Manual PS04

Work Permit form is updated manually on paper. Manual PS04Tools, consumable material and spare parts usage isrecorded on manually paper.

Manual PS04

Equipment Maintenance History Card updatedmanually on paper

Manual PS04

Work Order completed and closed in SAP SAP PS04

Monthly Work Order Completion Summary signedby Station In-charge sent to Manager S&TMaintenance PS1.

Manual PS04

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Moreover, Internal Audit made the following observations on implementation of SAP:

Maintenance Staff do not generate or use any reports via SAP.

There appears to be a lack of Proper Training and Practice on SAP usage.

Risk / Impact Inefficient usage of SAP.

Not getting Value for Money.

Information from SAP cannot be relied upon for Decision Making.

Recommendation Plant Maintenance Module of SAP should be fully implemented.

Complete SAP training should be given to the Maintenance Staff with particular

focus on how to generate and use Management Information Reports.

Priority Medium

Management

Comments

Letter has been sent to Department Heads for arranging Training Sessions

at Station for Staff on Optimal Use of SAP, especially report generation.

Plant Maintenance Module of SAP should be fully implemented.

Maintenance Supervisors execute work orders report at stations &

terminals. However other reports are executed by Planning Engineer for

management review.

Maintenance Supervisors have been assigned rights as per their jobresponsibility and they exercise rights when required. Details of rights are

as under

Create / Change / Print Notification

Create / Change / Close / Print Work Order

Execute Work Orders Report & History

Create / Change / Print Material Reservation

Create / Change / Print Purchase Requisition

Material Stock Overview

Complete SAP training should be given to the Maintenance Staff with particular

focus on how to generate and use Management Information Reports.

Agreed.

IT department should conduct trainings on regular basis for further

improvement.

Manager Manager S&T / Manager IT

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Responsible

Implementation

DateJune 2012

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2.4 Maintenance Department should Considerably Improve record keeping and

monitoring of material and manpower consumption on equipment.

Finding Internal Audit made the following observations on Manual Plant Maintenance Practicesat the station:

Combined Issues of Plant Maintenance:

Different formats of Maintenance History Cards are being used E.g. Standard

card appears to be (HSEQ-F-45, Rev Date: 01.12.2008) however for followingequipment a different format of card is in use:

Mainline Pump GM-002 (Mechanical)

Station Case Pressure Transmitter (Instrumentation)

Wire Position XMTR - Rotary Motion Type (Instrumentation)

Smoke Detectors (Instrumentation)

In some cases Spare Part Consumption on Maintenance History Card is not been

updated properly.

E.g. in following cases spare part consumption is not being updated on card:




There appears to be little oversight of Maintenance Supervisor on the rest of

Maintenance Teams working and record keeping.

Instrument Maintenance:

Entire equipment is replaced with a new one due to unavailability of spares at

the warehouse increasing the cost of maintenance.

E.g. Internal Audit noted that there is zero consumption of material and spare

parts for maintaining equipment. Following are 3 sample:




Subsequently on further probing the Instrument Technician confirmed that the

reason for zero consumption of parts and materials is that The whole

equipment is replaced instead on equipment breakdown.

Inventory items are being shared between Maintenance Departments of PS04 andPS01 effectively by-passing their respective warehouses E.g. Smoke Tester

Spray has been consumed for testing Smoke Detectors; however Maintenance

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History Card for this equipment shows NIL consumption.

5 samples of Work Orders randomly tested from September and October 2010 out

of which record of 2 work orders was found missing at the station, however thesehave now been received by Internal Audit via email.

2 samples of Work Orders randomly tested from October 2011, both of whichwere missing from file, however Work Permits for same were available at the

time of checking, Instrument Technician confirmed that these were not printed.

Electrical Maintenance:

5 samples of Work Orders randomly tested from September and October 2011 out

of which all 5 have information and signatures of Maintenance Technician

Missing. For example:

Actual Work Hours have not been updated on the form.

Type of Work used is not tick marked on the form.

Comments related to the Maintenance Job have not been updated at the

bottom of form.

Mechanical Maintenance:

Mechanical Maintenance does not return partially consumed items issued by

Warehouse for example pipes, similarly Warehouse is not bothered either toidentify or recover these items from User Department.

Risk / Impact Maintenance record keeping is not consistent.

Risk of high cost of maintenance if Management Information is not readilyavailable for Decision Making via SAP.

Recommendation Important information on the consumption of Material and Man-hours should

be uploaded in SAP.

Cost of Maintenance should be monitored to assess which factor of the

following is pushing it up:

Material consumption

Man hours consumption

Maintenance Tool cost

Workmanship cost

Materials shared between different stations should be routed through their

respective Warehouses.

Record keeping needs consistency and completion amongst all four sections ofElectrical, Instrument, Mechanical and Power Generation.

Maintenance Supervisor should randomly check the record keeping and work14 of 32


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completed by technicians on site for quality assurance.

Partially Consumed Material issued from Warehouse should be timely returned

by User Department if it is of no further use.

Priority High

Management

Comments

Planned and actual Man-hours are uploaded against each work order.

However for materials, separate MRs are generated. Maintenance

staff needs training for issuance of material against work order. IT

personnel should visit all stations & terminals to provide required

training.

Material consumption cost and some special tools e.g. cranes etc.

will be monitored after issuance of material and hiring of tools

against work order. In this regard, training is required. Man-hours

and workmanship cost is not possible as the SAP PM module is notintegrated with HR module.

The material is transferred warehouse to warehouse as a standard

practice however in case of emergency when transport is delayed /

unavailable, the material is shifted through Courier / goods transport

Company. The information should be communicated to Materials

dept.for their record updating.

All Maintenance staff is maintaining Equipment maintenance record

on history cards as well as SAP. Further more they have been

advised for consistency in record keeping.

Maintenance Representatives have been advised to update their

Records on the current HSEQ Formats, accordingly.

Maintenance supervisors are already in practice to check record

keeping of technical staff. However, at some stations, maintenance

supervisor and performer are same.

The concerned staff at station shall be advised to return the partially

consumed items to Warehouse against Zero Value items.

Spare parts of these Instruments are not available. Replacement of

the whole equipment is advisable and economical. However, it has

been advised to Maint. Representatives to record consumption of

spare parts, wherever applicable

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Manager

Responsible

Manager S&T

Implementation

DateSEP,2012

2.5 HSE - Smoke Detectors and Multi-Gas-Monitor not present at the station.

Finding Internal Audit made the following observations related to HSE at the station:

Smoke detectors are not installed on the following locations:

Station House

MPT residence

NMPT residence

PS-04 Fazilpur Stations Multi-Gas-Monitor is sitting with PS-1 Warehouse

(Korangi) on Dispatch Advice (DA) since November 11, 2010 for calibration.

No Multi-Gas-Monitor replacement was physically verified by Audit Team at the

station.

As per Dispatch Advice record, a Multi-Gas-Monitor was loaned from WOTS-3

between 05.10.2011 28.10.2011.

Multi-Gas-Monitor Usage/Purpose:

The monitor is used for detection of any gas and fume leakage. Monitor takes asample of the air and gives reading of the details as below:

Plant Area: For detection of permissible fumes levels for Lower Explosive Limit

(LEL).

Welding Area: For detection of fumes levels of Pipeline, HSD tank cleaning and

maintenance.

Confined Space: For detection of oxygen level in below ground or excavation toensure safe working condition of staff.

Moreover, Audit Team observed that contractual labour working on Safety

Warehouse Building inside Plant Area premises were not wearing thefollowing Personal Protective Equipment:

Safety Shoes

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Protective Gloves

Internal Audit noted Instrument Technician wearing Shalwar Kameez inside

Maintenance Workshop Area during daytime working hours.

There was no safety briefing given to Internal Audit Team at the station duringthe course of audit, however a safety brochure each was handed over 2 days

before departure.

Risk / Impact Risk of injury to contractual staff for not wearing PPEs.

Fumes and gas leakage intensity might not be detected in the absence of the Multi-

Gas-Monitor at the station and may result in loss of life and property.

Recommendation Smoke detectors should be installed at the Station House, MPT and NMPT residence.

HSE standards should be enforced for all contractual staff at all times.

Multi-Gas-Monitor sent for calibration to PS01 Korangi should be clawed back onurgent basis.

Priority High

Management

Comments

Manager

Responsible

Manager HSE

ImplementationDate

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2.6 Inventory Items lying in open area behind NMPT residence have apparently been

abandoned by the Warehouse.

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Finding Internal Audit observed that there are a number of items lying in open area behind NMPT

residence.

No record was available for these items with the Warehouse. However on Internal

Audit request, lists were prepared by respective departments of items in their

custody. These include useable, project leftover, and scrap items. Project leftover and Useable

items in User Department custody are excluded from Warehouse Inventory; similarlyscrap has not been handed over to Warehouse for timely disposal.

Following are the list of items lying in open area department wise:

Mechanical Maintenance

Sr. Item DescriptionQuantityin Feet Status

1 G.I. Pipe 03" 84ProjectLeftover

2 G.I. Pipe 2.5" 20

Useable

3 G.I. Pipe 2" 6

4 G.I. Pipe 1.5" 140

5 G.I. Pipe 1.4" 80

6 G.I. Pipe 1" 10

7 G.I. Pipe 3/4" 150

9 G.I. Pipe 1/2" 30

8 G.I. Pipe 3/4" 50

Scrap10 G.I. Pipe 1/2" 20

11 G.I. Pipe 04" 20

WarehouseSr. Item Description Quantity Status

1Cable, Power, 4Core, 10MMSQ,0.6/1KV 270 Mtr

Useable

2Cable, 4 Core, 120 mm,600/1000V 65 Mtr

3Cable, High Voltage, 6.35/11KVXLPE, S/95 115 Mtr

4 Cable, Telephone, 0.6MM, 50 Pairs 68 Mtr

5 Coaltar Enamel 105/8, BS4164 124.5 MT*

6

Corrosion Inhibitor DCI-6A> (this isissued once and consumed asrequired)

10Drums**

7Foam Compound Protein 3%(Local) 210 Kg

8 Foam Compound AFFF CF 3% 88.88 Kg

* 821 Tubes of 50 Kg each

** 190.5 Kg/Drum

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Risk / Impact Practice of storing items/inventory for undefined periods by User Department

without the knowledge and custodianship of Warehouse is fraught with risks of

misappropriation.

Items lying under open sky without protection, for example pipes and motor

operated valves are at risk of corrosion.

Recommendation Assets/Inventory items lying in open area behind NMPT residence should be

returned by User departments to the Warehouse.

Warehouse should take ownership and proactively identify items lying about

at the station without proper accountability.

SOP on Project Left Over items should be implemented.

Items lying in open are that are exposed to risk of corrosion should be properly

protected.

Priority High

Management

Comments

Lists of equipment lying in open yard have been prepared.

Letters has been sent to Manager (Finance) & Manager (Materials)

to incorporate the option of Consumption in SAP for partially

consumed items.

Moreover, all the concerned staff has been advised to return the

partially consumed items to Warehouse. Manager (Material) to

advise on return of partially consumed items, purchased from local

market.

Due to non availability of Finance Tags, the PG items have not been

handed over to Warehouse. PG Representative has been advised to

prepare list of such items so that Finance Tags may be obtained.

Henceforth, these items may be handed over to Warehouse

CP Representative has been advised to return the issued (Extra /

bulk) items to Warehouse and issue these items, as and when

required basis.

Items (under heading of Administration) have been returned back

to Warehouse as E-grade on Dispatch Advice.

Manager

Responsible

Manager S&T

Implementation June 2012

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Date

2.7 Scrap Declaration Practice lacks firm controls.

Finding Internal Audit made the following observations regarding scrap declaration:

There is no SOP at the station to determine on what basis User Department

declares an item to be scrap.

Warehouse does not take any initiative with the user department to identify items

which may be scrap and are of no further use.

Following is the list of items declared scrap by User Department without the knowledge /custody of Warehouse. These items are lying in open area behind NMPT residence.

Administration

Sr. Item Description

Quanti

ty Status

1 Revolving Chair (Damaged / Broken) 3

Scrap

2 Table for Table Tennis (Broken) 1

3 Carom Boards (Broken) 3

4 Wooden Racks (Broken) 2

5 Wooden Table (Broken) 1

6 Steel Cot (Broken) 1

7 Dining Chairs (Broken) 20

9 Easy Chairs (Broken) 12

8 Exhaust Fan (Corroded) 1

10 Iron Chair (Broken) 1

Mechanical Maintenance

Sr. Item Description

Quantity inFeet Status

1 G.I. Pipe 3/4" 50

Scrap2 G.I. Pipe 1/2" 20

3 G.I. Pipe 04" 20

Risk / Impact

Scrap is not being identified timely by Warehouse for disposal.

Project Leftover and Useable items may be declared scrap by mistake ordeliberately in absence of SOP.

Recommendation Scrap Declaration SOP should be implemented at the station.

Warehouse to take ownership and pro-actively identify items which are lyingabout at the station without accountability.

Priority High

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Management

Comments

Manager

Responsible

Manager Materials

Implementation

Date

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2.8 Inventory Management needs Substantial Improvement at the Warehouse.

Finding Internal Audit made the following observations on Warehouse activities:

Audit Team physically verified 24 items (5 high value items) randomly at the

Warehouse out of which 1 discrepancy was found in a high value item:

Material Item Description SAPPhysicallyVerified

Total Value(PKR)

65-23-09-0071Circuit Breaker 2-Pole P/N

41420-69-57

03 02 419,094

Warehouse does not monitor inventory re-order levels in SAP to ensure

timely availability of spare parts and consumables at the station, in some

instances User Department had to directly chase PS1 Warehouse for urgent

delivery of items.

SAP implementation and usage appears to be non-existent at the Warehouse

except for when an entry is made while issuing an item out of stock.

Warehouse does not generate and use any reports via SAP to maintain inventoryat optimum level.

Changes in inventory volumes are recorded manually on paper history card in

addition to the entry made on SAP.

Inventory items are searched physically by warehouse staff using old codes,

although SAP codes are written on the cabinets, but without proper sequencing.

There appears to be a lack of Proper Training and Practice on SAP usage.

Inventory items are being shared and used directly between User Departments of

different stations effectively by-passing their respective Warehouses.

There appears to be no monitoring and reporting of carrying costs of inventoryand how to manage dead stock lying in the Warehouse.

Warehouse at PS04 Fazilpur is being used jointly by PS04 and TS02. On

further probing it has been confirmed by Materials Department that TS02

Warehouse is in-active due to a lack of SAP license.

Risk / Impact Duplication of work.

In-efficient use of company ERP system SAP.

Increased cost of maintaining inventory in absence of proper reporting andmonitoring via SAP.

Recommendation SAP should be fully implemented at the Warehouse.

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SAP Training should be given to the Warehouse Staff with particular focus on

how to generate and use Management Information Reports.

Warehouse should manage inventory re-order level using SAP.

SAP should be used to record changes in inventory volumes, while paper historycard to be made redundant.

New SAP codes should be used for physical searching of inventory in the

Warehouse instead of old ones.

Warehouse should maintain inventory at optimum level by using SAP.

SAP license should be given at TS02 Warehouse.

Priority High

Management

Comments

Manager

Responsible

Manager Materials

Implementation

Date

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2.9 Fixed Asset Register does not match with assets present at the station.

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Finding Internal Audit observed a number of discrepancies between Fixed Asset Register

(FAR) maintained in SAP and physically verified / available assets at station.

Discrepancies noted are listed below asset class wise:

Computers

FAR record shows 11 computers, whereas 14 computers were found at the station.

Following 3 computers were in excess.

Sr.

Asset Asset Description Location

1 102-5131-152 HP Compaq with Monitor PL Maintenance Room

2 102-5131-074 IBM Net vista with Monitor Control Building

3 C-7520-1034711 IBM Net vista with Monitor HSE Engineer Room

Following 5 computers did not have an asset tag affixed; however asset description did

match with FAR record.

Sr.

Asset Asset Description Location

1 No Tag affixedHP Intel, Core 2 Duo, with LCD

Monitor

Operation Engineer

Room

2 No Tag affixedHP Intel, Core i3, with LCD

MonitorTelecom Room

3 No Tag affixed HP Intel, P IV with Monitor Telecom Room

4 No Tag affixed IBM PC 300 Telecom Room

5 No Tag affixed HP Intel with Monitor PA to Station In-charge

Printers

FAR shows 5 printers whereas 7 printers were found at the station.

Following 2 printers were in excess.

Sr

. Asset Asset Description Location

1 102-5144-065 HP Laser Jet 1200 Series PL Maintenance Room

2 102-5144-038 HP Laser Jet 1000 Series Warehouse Office

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Risk / ImpactRisk of misappropriation of assets.

Fixed Assets Register in SAP does not represent the actual statuses of assets presentat the station.

Recommendation Station In-charge in co-ordination with Manager Finance should take initiative to

verify all assets present at the station so that Fixed Asset Register can be updated.

Priority High

Management

Comments

Activity has been started for updating the Fixed Asset Register as

per physical assets available, jointly by S&T(OPS), Materials&

Finance Departments at PS-4.

List of air conditioners is being reviewed so that missing tag may

be obtained from CHQ via Finance representative.

Finance Representative has been advised to arrange missing

Finance Tags from CHQ.

Letters to concerned department Heads have been sent,

accordingly.

Manager

Responsible

Manager Finance / Manager S&T

Implementation

Date

May 2012

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ANNEXURE I

PipelineSr. Item Description Qty

1 ADJUSTABLE (18") 1

2 ADJUSTABLE (15") 13 NOSE PLEIR 2

4 MONKEY PLEIR 3

5 WIRE BRUSH 1

6 PLEIR 1

7 PIPE WRENCH 1

8 BLADE CUTTER 1

9 HAMMER 1

10 SCREW DRIVER 3

11 L KEY 2

12 BLADE CUTTER 3

13 STAR SET 1

14 SCISSOR 1

15 CYLINDER KEY 2

16 TEFLON TAPE 6

17 EMERY PAPER 2

18 CYLINDER FITTING 20

19 CYLINDER FITTING 5

20 DEPOXY 10

21 OPEN SPANNER 14

22 RING SPANNER 9

23 CHIESEL 124 RUBBER PACKING 5

25 COTTON GLOVES 2

26 SURF 1

27 PENCIL 1

28 CHIESEL 8

29 IROM BAR (BARI) 1

30 STRAIGHT DRIVER 1

31 MONKEY PLEIR 1

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32 HAMMER 1

33 HAMMER 3

34 WOODEN PEG 10

35 COTTON GLOVES 1

36 EMERY PAPER 237 FITTING 10

38 GREASE GUN 1

39 WIRE BRUSH 3

40 HAMMER 2

41 PLASTIC GLOOVES 2

42 SAFETY GLOOVES 2

43 SAFETY CLAMPS 9

44 SAFETY CLAMPS 3

45 HOSE PIPE 1

46 HOSE PIPE 2

47 BRUSH 15

48 BUCKET 3

49 WATER COOLER 1

50 CYLINDER 29

51 BRUSH 78

WOP PIG ITEMS:

PipelineSr

. Item Description

UNUS

ED USED1 GUIDE DISCS 41 12

2 SEALING DISCS 2 24

3 SPACERS 8 0

4 BRUSHES 70 30

5 BOLTS 220 0

6 NUT 200 0

KMK BRUSH PIG ITEMS:

PipelineSr. Item Description

UNUSED USED

1 GUIDE DISCS 20 10


3 SPACERS 0 13

4 BRUSHES 6 7

5 BOLTS 5 0

6 NUT 5 0

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KMK MAGNETIC PIG ITEMS:

PipelineSr. Item Description

UNUSED USED

1 GUIDE DISCS 13 16


3 SPACERS 1 13

5 BOLTS 5 0

6 NUT 5 0

Documents

1.Draft Report - Fazilpur PS04