4140 sulted in eliminating a considerable duplication of records and files. Under prior Operations, account payments were incorporated into a separate file by month for later review by AEC and GAO audit staff as well as by vendor for accounting purposes. By mutual consent, effect- ive 1 January 1955, the separate AEC-GAO file was eliminated, resulting in a considerable saving of time and supplies. Most material purchased was shipped by vendors to Oakland, California, for packaging and reshipment to the Jobsite. As material arrived in Oakland, the packer immediately prepared and transmitted receiving reports to the Accounts Payable Section for processing and prompt payment of vendor’s invoices in order to avoid losing cash discounts. From 1 July 1954 through 31 May 1956, this Section processed and paid vendor invoices totaling approximately $17,802,000.00, (after deductions of cash discounts in excess of $87,500.00). As under prior Operations, procedures and methods used in processing per diem and travel expense payments were in accordance with es- tablished Company policy and complied with the provisions and requirements of Appendix “B” of the Contract. From the effective date of Operation REDWING (1 July 1954) through the month of May 1956, a total of 4,183 Travel Orders were processed covering single and multiple movement of personnel. Travel expenses in the approximate amount of $312,300.00 were processed and paid through both the Home and Jobsite Offices. Approximately 55,000 checks were processed during this period for payment of travel expenses, vendor's invoices, and other miscellaneous accounts payable. PROPERTY. Inasmuch as the functions of Property and Materials must be synchronized with Receiving and Warehousing, accountability procedures were developed in conjunction with Jobsite and on-continent warehousing operations. Jobsite Receiving and Warehouse Procedures were drafted concurrently with Jobsite Property and Ma- terial Accounting Procedures in order that controls would be maintained at all times without hampering or overlapping functions of the ware- ouse. Accounting controls for material in transit to Jobsite were maintained through the ‘“In- ventory in Transit” accounts. Procedures pro- vided that, upon receipt at Jobsite, the items be cleared from the “Inventory in Transit” accounts by charging the applicable warehouse inventory account; control of materials to the applicable job feature was maintained through the use of stores issues. All equipment was classified at time of purchase as one of the following categories: CHAPTER Ill, SECTION 2 1. Equipment not Related to Construction 2. Construction Equipment 3. Installed Equipment. Control of equipment was maintained by use of an identification numbering system. Purchase Orders for equipment reflected identification numbers applicable to one of the above categories as well as the end use and/or the particular job feature. At time of forwarding copies of invoices covering equipment purchases to the Jobsite, equipment cards reflecting pertinent information were completed and placed in the applicable Home Office file. Periodically, complete inventory equipment listings at Jobsite were reconciled with Home Office records. Copies of the monthly listings of retirements from equipment inventories, the periodic perpetual inventory, and the periodic physical inventories were required by the Commission. Receiving records at PPG were consistently good. Loss and damage of items in transit via surface vessel and airlift were considered negligible. Relief of accountability in these instances was accomplished by processing Over, Short and Damage reports at Jobsite. Practically all adjustments and claims with vendors and oncontinent carriers were accomplished satisfactorily through coordinated efforts of on-continent warehousing and accounting organizations. Relief of accountability of materials and equipment at Jobsite by loss, destruction, or normal wear and tear was accomplished by means of reports of survey containing in- formation as to the circumstances under which the items were expended. These reports support- ed inventory adjustments and entries on retirement work orders. INTERNAL AUDIT. The primary function of the Internal Audit Section was to perform detailed audits of cash expenditures and income revenues to ascertain propriety and compliance with the terms and conditions of the Contract. During the month of December 1954, in accordance with instructions from the Commission, the detail audit procedure was discon- tinued in favor of a comprehensive functional audit program for both Jobsite and Home Office operations. Under the new program internal auditing became an element in the administration of operations performed by the Contractor. Internal audits, in addition to ascertaining the allowability of expenditures, realization of revenues, and compliance with AEC Manual and contractual provisions, included reviews of the business practices and procedures having an Page 3-9