CHAPTER 11.3 METHODS AND PROCEDURES In conformance with the terms and conditions of the Contract, as set forth in Chapter 11.1; in accordance with requirements and directives of the Commission's Director of Finance; and through audit-procedure re- views and consultations with the Commission's Local Auditor and General Accounting Office Field Auditors, the Contractor's fiscal officials have compiled and issued various and necessary Controller's Bulletins for the guidance of operating departments. These methods, procedures, and pro- cesses, together with sample exhibits of forms, reports, and statements, are reviewed and described in the following subsections: PROCUREMENT AUDIT The Fiscal Division audit of procurement documents (Purchase Orders, Abstracts of Bids, Requisitions, pertinent correspondence, quotations, etc.) was initially performed on a selective post audit basis under which approximately 10 per cent of all Purchase Orders issued were audited. This selective post audit was considered adequate in view of the abilities and qualifications of the top-level procurement personnel, and in view of the established Procurement Procedure. It became apparent to H & N that selective audit was not adequate because of the customary and natural inclination of buyers to expedite procurement and delivery while neglecting compliance with governmental reimbursement documentation requirements. In March 1950, during a re- view of procurement practices with AEC personnel, it was agreed that more stringent measures were necessary to insure compliance with the established Procurement Procedure. As a result, immediate steps were taken to organize and staff a Procurement Audit Unit, under the general supervision of the Chief Internal Auditor, reporting directly to the Office of the Controller. This unit immediately assumed responsibility for the pre-audit and for audit approval of all currently issued Purchase Orders, in order to verify ade- quacy of the documents with respect to: 1. Basis of award. 2. Approval by proper authority. (For example, orders in the amount of $50,000.00, or more, required prior approval by of- ficlally designated representatives of the AEC.) 3. Propriety of items purchased, for use in performance of the work 4, Conformance of items specified on Purchase Order to specifications under the Contract, and for reimbursement from government funds. reflected by the Requisition. (In numerous instances it was nec- essary to obtain confirmation from engineering, or other tech- nical personnel. ) 11-12