TfL RESTRICTED
FINAL INTERNAL AUDIT REPORT
London Transport Museum Stock (IA 12
126/F)
Sam Mullins,
Director, London Transport Museum
Audit Conclusion: Audit not closed
25 September 2013
Issue
categories
Agreed
actions
Satisfactorily
addressed
Partially
addressed
No longer
applicable
Not
addressed
Priority 1 10 5 5 0 0
Priority 2 6 4 2 0 0
Priority 3 0 0 0 0 0
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 2
Contents
EXECUTIVE SUMMARY .................................................................................... 3
STATUS OF AGREED ACTIONS ...................................................................... 5
APPENDIX 1 – DISTRIBUTION LIST .............................................................. 11
APPENDIX 2 – KPMG HIGHLIGHTS MEMORANDUM 2013 STATUS OF
2011/12 ACTIONS ........................................................................................... 12
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 3
EXECUTIVE SUMMARY
Objective
The objective of this audit was to review the adequacy and effectiveness of the
controls operating over LTM stock.
Scope
The audit focussed on the control environment in relation to the following key
risk areas:
? General governance arrangements
? Physical controls
? Stock level management
? Stock system controls
? Rolling stock takes
? Third party/ consignment stock
? Warranties/ insurance provision
? Provisions/ write downs
? Accounting for stock
Summary of findings
Our Interim Audit Report dated 21 February 2013 entitled London Transport
Museum Stock identified four Priority 1 and four Priority 2 issues resulting in
sixteen management actions.
We have now carried out a follow up review of the agreed management actions
and can confirm that nine have been satisfactorily addressed.
Of the remaining seven actions, all have been partially addressed, with plans
put in place to ensure these will be completed in the near future. A number
relate to changes to the Purchasing Pricing and Stock Policy. The changes
have now been made and the policy is being reviewed by Museum Finance
before presentation to the next LTM Trading Board meeting on 25 September.
We also followed up the 2011/12 stock control management actions agreed with
KPMG, as noted in their ‘Audit highlights memorandum and management letter’,
31 May 2013. Three actions remain in progress and these are summarised in
Appendix 2.
KPMG also raised a Grade A observation for the current year on stock control.
Apart from the implementation of Internal Audit recommendations, KPMG
recommends support and training of staff, independent checks at stock counts,
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 4
and further investigation of negative stock items. Management actions are in
place.
A Finance Consultant is preparing process controls documentation for the entire
stock process as a basis for discussion at the September Audit Committee. The
Audit Committee has also recognised that effective stock control depends on
leadership, resourcing, and behavioural factors as much as the resolution of
individual issues.
Much work has been carried out but the postponement of the first two rolling
stock counts highlights that resourcing issues continue to have an impact. Until
the first count has been properly processed through Finance and the stock
control schedule is being followed there remains a risk of the controls over stock
not being fully effective.
Accordingly, this audit is not closed. We will carry out a second follow-up review
by 31 December 2013 to confirm that Internal Audit and KPMG actions have
been fully addressed. Internal Audit will attend the next stock check to ensure
processes and procedures are being followed.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 5
STATUS OF AGREED ACTIONS
Ref Agreed action Owner and
due date
Status Further action required and
due date
Priority 1 actions
1
Create a Period End
Reporting Pack of review
schedules to be signed off
each period by Finance
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period End Reporting Pack has
been in place since Period 2
2013/14. Period 4 has been
completed and reviewed by the
Finance Consultant.
2
Period End Reporting Pack to
include a report of all
purchase orders over £5k.
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period 4 Period End Reporting
Pack includes a report of all
purchase orders over £5k.
Management reduced the threshold
to £2k from P6.
3
Purchasing Pricing and Stock
Policy to be updated to
include replenishment levels.
Mike Walton
1 April 2013
Partially addressed
The revised policy is being reviewed
by Finance
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 6
Ref Agreed action Owner and
due date
Status Further action required and
due date
4
The Trading and Finance
teams will review
arrangements for rolling stock
takes versus an annual stock
take, including stock held at
Internova, with a view to
assessing whether it is
beneficial to alter the current
arrangements. High value
items will continue to be
counted three times a year.
The final decision will be
included in the updated
Purchasing Pricing and Stock
Policy.
Mike Walton
1 April 2013
Partially addressed
An initial review has taken place
and a rolling stock take schedule is
in place for 2013/14.
The first and second counts in the
schedule had been postponed due
to resourcing issues. The first count
was eventually carried out in
August.
An annual stock take will be
performed at year end.
The strategy will be included in the
Purchasing Pricing and Stock
Policy.
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
5
Stock count discrepancies
will be reviewed / investigated
by Finance and documented
in the Period End Reporting
Pack.
Terry Noonan
1 April 2013
Partially addressed
The Period 4 Period End Reporting
Pack includes a statement that no
stock counts were performed.
The results of the first count are
pending review and approval by
Finance so any discrepancies found
have yet to be investigated.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 7
Ref Agreed action Owner and
due date
Status Further action required and
due date
6
The Purchasing Pricing and
Stock Policy will be updated
to include procedures for
transfers of stock.
Mike Walton
1 April 2013
Satisfactorily addressed
Revised procedures for transfers of
stock have been issued and will be
referenced in the revised policy.
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
7
A report of slow moving items
will be included in the Period
End Reporting Pack and
reviewed by Finance.
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period 4 Period End Reporting
Pack includes a slow moving items
list and analysis is prepared for
review by the Trading Team.
8
The updated Purchasing
Pricing and Stock Policy will
be presented for sign off to
the Trading Company Board.
Mike Walton
Chris Gilbert
30 J une 2013
Partially addressed
The revised policy is being reviewed
by Finance
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
9
Actual stock level monitoring
will be included in the Period
End Reporting Pack.
Terry Noonan
1 April 2013
Partially addressed
The revised Purchasing, Pricing and
Stock policy includes product line
target stock levels and is under
review by Finance.
The graduate trainee will prepare
further target stock level supporting
data.
Once the Purchasing, Pricing
and Stock policy is finalised,
target stock levels will be
used to periodically monitor
stock levels in the Period End
Reporting Pack.
Detailed analysis will then be
prepared by the graduate
trainee
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 8
Ref Agreed action Owner and
due date
Status Further action required and
due date
31 December 2013
10
Review of stock levels will be
included in the periodic
Trading Executive Board
report.
Chris Gilbert
1 April 2013
Satisfactorily addressed
Stock levels will be presented at the
next Trading Executive meeting in
September 2013.
Priority 2 actions
11
A detailed Goods In process
will be trialled to determine a
more accurate GRNI accrual
in P12 and P13 of 2012/13.
The process will be reviewed
in P1/P2 of 2013/14 and a
decision taken as to the way
forward in Q2.
Terry Noonan
30 J une 2013
Satisfactorily addressed
At Period 5, the Finance Consultant
implemented a process that bases
the GRNI accrual on the detailed
Futura receipts listing.
12
Lack of resources means that
adequate segregation cannot
be achieved. However,
reports will be included in the
Period End Reporting Pack to
allow Finance greater
oversight of receiving
activities (the ‘Segregation
Review’).
Terry Noonan
1 April 2013
Satisfactorily addressed.
The Trading Department has
implemented several improvements
for segregation of duties, such as
re-allocating and formalising
responsibilities for ordering,
receiving, and entering receipts in
Futura.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 9
Ref Agreed action Owner and
due date
Status Further action required and
due date
Combined with Finance’s review of
significant Purchase Orders and the
GRNI accrual, adequate
segregation of duties has been
addressed as far as possible.
13
A work instruction relating to
stock responsibilities will be
issued to any CSA working in
this area.
J anette
Palmer
1 April 2013
Satisfactorily addressed
Two recent instructions were issued
to brief and train CSAs :
? Stock transfer process
? Mail order briefing
14
The Period End Reporting
Pack will include discrepancy,
damaged stock transfers and
miscellaneous adjustments
reports.
Terry Noonan
1 April 2013
Satisfactorily addressed
The Period 4 Reporting Pack
includes damaged stock and
miscellaneous adjustments reports.
15
The Damaged Stock report
will be signed off by the Head
of Trading each period.
Mike Walton
1 April 2013
Partially addressed
The Head of Trading has not signed
off the report yet due to leave.
The Head of Trading is to
sign off the damaged stock
reports. In the interim,
Finance will sign off where
amounts are significant
30 September 2013
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 10
Ref Agreed action Owner and
due date
Status Further action required and
due date
16
Data warehousing continues
to be developed and will
allow easy analysis of data in
all areas, and specifically for
stock:
? Requirement for
replenishment ordering by
product and priority.
? Slow-moving stock in
terms of monthly sales.
? GRNI reporting.
? Stock adjustments.
Chris Gilbert
31 J uly 2013
Partially addressed
Apart from an analysis report for
order replenishments, the other
analysis reports have been
implemented and are part of the
Period End Pack.
The Data Warehousing
project will be taken forward
before March 2014.
No further action is to be
taken on the outstanding
report (order replenishment)
and it is not considered a
priority.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 11
APPENDIX 1 – Distribution list
This report was sent to Sam Mullins, Director, London Transport Museum, by
Clive Walker, Director of Internal Audit, and copied to:
Memet Bunyan Retail Manager, LTM
Nicky Ward Business Operations Manager, LTM
Michael Walton Head of Trading, LTM
J ennifer Farr Stock and Business Analyst, LTM
Chris Gilbert Assistant Director, Business and Performance,
LTM
Terry Noonan Finance and Assurance Manager, LTM
J anette Palmer Head of Customer Services, LTM
Roger Cooke Chair of LTM Audit Committee
Sir David Bell Chair of the LTM Board
Vernon Everitt Managing Director, Marketing &
Communications, TfL
Martyn Loukes as Key Risk Representative, M&C
Nigel Blore Head of Group Insurance
Andrea Clarke Director of TfL Legal
David Goldstone Chief Finance Officer
Howard Carter General Counsel
Nicola May KPMG
The report will be copied to the Commissioner and the Chairs of the TfL Audit
and Assurance Committee and the LTM Audit Committee at the end of the
period.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 12
APPENDIX 2 – KPMG Highlights Memorandum 2013 status of 2011/12
actions
KMPG
Observation
Management
action
KPMG update at 31
May 2013
LTM update at 30
August 2013
Goods inwards – stock costing
We noted that the
lack of
descriptions and
barcodes on the
purchase orders
resulted in
inappropriate
booking-in of
stock.
When booking the
purchase orders in
the Futura
System, the
associated unit
price must be
input.
When the goods
relating to this
purchase are
received, the user
is able to update
the value,
however no such
opportunity is
offered at the time
of booking in the
invoice.
Our audit work
identified
inconsistencies
between unit
prices recorded in
the stock system
and the actual
amount.
Bar codes for
new products to
be reviewed.
Staff training
guidelines to be
reviewed.
Regular
monitoring
process to be
introduced and
product lines
with zero levels
to be removed.
The availability of
barcodes on stock
items remains a
work in progress
due to the wide
nature of stock
items held by the
Museum.
We observed the
goods receipting
process and
confirmed that
product descriptions
were being
reviewed to ensure
that items were
recorded correctly.
We also confirmed
that there is an
ongoing effort to
increase the level of
training and support
offered to staff.
Further work is
required in relation
to zero stock lines
as well as
investigation of
negative stock lines.
Review of
barcodes is
planned, but is not
a current priority.
Staff training - see
action at 13 above
Zero and negative
stock is included in
the Period End
pack for review by
Finance.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 13
KMPG
Observation
Management
action
KPMG update at 31
May 2013
LTM update at 30
August 2013
Stock movement
We noted that
when stock was
moved from one
site to another
there was a delay
in recording this in
Futura.
All stock
movements to
be recorded in
Futura
immediately
and cover will
be arranged for
when the Stock
Analyst is away.
Issues continue in
relation to the
recording of
information in
relation to stock
items when
transported between
sites.
Processes may be
improved by
creating a branch
within the Futura
system specifically
for items in transit.
This would enable
stock to be recorded
as leaving Acton
and then separately
recorded as arriving
at Covent Garden.
Any discrepancies
could then be easily
identified and
investigated.
A revised transfer
procedure was
issued on 25 J uly
2013.
This states that all
transfers should be
accompanied by a
list of stock items,
signed by the
initiator and
approved by the
Trading
Management
Team.
The Acton
Warehouse
Receiver has been
given access to
Futura so that he
can prepare
transfer lists. He
will be trained w/c
23 September
2013.
Stock count plan
Management had
planned to ensure
that cyclical,
periodic counts
were performed
throughout the
year; instead there
was one full count
at the end of
February.
Stock count
schedule to be
reviewed each
period.
High value
stock to be
identified and
reviewed three
times per year.
The stock count
schedule was
revisited with high
value items being
subjected to counts
throughout the year.
Despite this we
identified issues in
relation to the
accuracy of stock
counts which
require that further
improvements are
made.
An appropriate
count schedule has
been issued for
2013/14. The first
count is being
reviewed by
Finance.
This is a focus of
the September
Audit Committee
who will discuss
stock control in the
context of the
process
documentation
being prepared.
doc_508752315.pdf
FINAL INTERNAL AUDIT REPORT
London Transport Museum Stock (IA 12
126/F)
Sam Mullins,
Director, London Transport Museum
Audit Conclusion: Audit not closed
25 September 2013
Issue
categories
Agreed
actions
Satisfactorily
addressed
Partially
addressed
No longer
applicable
Not
addressed
Priority 1 10 5 5 0 0
Priority 2 6 4 2 0 0
Priority 3 0 0 0 0 0
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 2
Contents
EXECUTIVE SUMMARY .................................................................................... 3
STATUS OF AGREED ACTIONS ...................................................................... 5
APPENDIX 1 – DISTRIBUTION LIST .............................................................. 11
APPENDIX 2 – KPMG HIGHLIGHTS MEMORANDUM 2013 STATUS OF
2011/12 ACTIONS ........................................................................................... 12
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 3
EXECUTIVE SUMMARY
Objective
The objective of this audit was to review the adequacy and effectiveness of the
controls operating over LTM stock.
Scope
The audit focussed on the control environment in relation to the following key
risk areas:
? General governance arrangements
? Physical controls
? Stock level management
? Stock system controls
? Rolling stock takes
? Third party/ consignment stock
? Warranties/ insurance provision
? Provisions/ write downs
? Accounting for stock
Summary of findings
Our Interim Audit Report dated 21 February 2013 entitled London Transport
Museum Stock identified four Priority 1 and four Priority 2 issues resulting in
sixteen management actions.
We have now carried out a follow up review of the agreed management actions
and can confirm that nine have been satisfactorily addressed.
Of the remaining seven actions, all have been partially addressed, with plans
put in place to ensure these will be completed in the near future. A number
relate to changes to the Purchasing Pricing and Stock Policy. The changes
have now been made and the policy is being reviewed by Museum Finance
before presentation to the next LTM Trading Board meeting on 25 September.
We also followed up the 2011/12 stock control management actions agreed with
KPMG, as noted in their ‘Audit highlights memorandum and management letter’,
31 May 2013. Three actions remain in progress and these are summarised in
Appendix 2.
KPMG also raised a Grade A observation for the current year on stock control.
Apart from the implementation of Internal Audit recommendations, KPMG
recommends support and training of staff, independent checks at stock counts,
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 4
and further investigation of negative stock items. Management actions are in
place.
A Finance Consultant is preparing process controls documentation for the entire
stock process as a basis for discussion at the September Audit Committee. The
Audit Committee has also recognised that effective stock control depends on
leadership, resourcing, and behavioural factors as much as the resolution of
individual issues.
Much work has been carried out but the postponement of the first two rolling
stock counts highlights that resourcing issues continue to have an impact. Until
the first count has been properly processed through Finance and the stock
control schedule is being followed there remains a risk of the controls over stock
not being fully effective.
Accordingly, this audit is not closed. We will carry out a second follow-up review
by 31 December 2013 to confirm that Internal Audit and KPMG actions have
been fully addressed. Internal Audit will attend the next stock check to ensure
processes and procedures are being followed.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 5
STATUS OF AGREED ACTIONS
Ref Agreed action Owner and
due date
Status Further action required and
due date
Priority 1 actions
1
Create a Period End
Reporting Pack of review
schedules to be signed off
each period by Finance
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period End Reporting Pack has
been in place since Period 2
2013/14. Period 4 has been
completed and reviewed by the
Finance Consultant.
2
Period End Reporting Pack to
include a report of all
purchase orders over £5k.
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period 4 Period End Reporting
Pack includes a report of all
purchase orders over £5k.
Management reduced the threshold
to £2k from P6.
3
Purchasing Pricing and Stock
Policy to be updated to
include replenishment levels.
Mike Walton
1 April 2013
Partially addressed
The revised policy is being reviewed
by Finance
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 6
Ref Agreed action Owner and
due date
Status Further action required and
due date
4
The Trading and Finance
teams will review
arrangements for rolling stock
takes versus an annual stock
take, including stock held at
Internova, with a view to
assessing whether it is
beneficial to alter the current
arrangements. High value
items will continue to be
counted three times a year.
The final decision will be
included in the updated
Purchasing Pricing and Stock
Policy.
Mike Walton
1 April 2013
Partially addressed
An initial review has taken place
and a rolling stock take schedule is
in place for 2013/14.
The first and second counts in the
schedule had been postponed due
to resourcing issues. The first count
was eventually carried out in
August.
An annual stock take will be
performed at year end.
The strategy will be included in the
Purchasing Pricing and Stock
Policy.
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
5
Stock count discrepancies
will be reviewed / investigated
by Finance and documented
in the Period End Reporting
Pack.
Terry Noonan
1 April 2013
Partially addressed
The Period 4 Period End Reporting
Pack includes a statement that no
stock counts were performed.
The results of the first count are
pending review and approval by
Finance so any discrepancies found
have yet to be investigated.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 7
Ref Agreed action Owner and
due date
Status Further action required and
due date
6
The Purchasing Pricing and
Stock Policy will be updated
to include procedures for
transfers of stock.
Mike Walton
1 April 2013
Satisfactorily addressed
Revised procedures for transfers of
stock have been issued and will be
referenced in the revised policy.
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
7
A report of slow moving items
will be included in the Period
End Reporting Pack and
reviewed by Finance.
Memet
Bunyan
1 April 2013
Satisfactorily addressed
The Period 4 Period End Reporting
Pack includes a slow moving items
list and analysis is prepared for
review by the Trading Team.
8
The updated Purchasing
Pricing and Stock Policy will
be presented for sign off to
the Trading Company Board.
Mike Walton
Chris Gilbert
30 J une 2013
Partially addressed
The revised policy is being reviewed
by Finance
Finance will present the draft
policy to the LTM Trading
Board at its next meeting on
25 September 2013.
9
Actual stock level monitoring
will be included in the Period
End Reporting Pack.
Terry Noonan
1 April 2013
Partially addressed
The revised Purchasing, Pricing and
Stock policy includes product line
target stock levels and is under
review by Finance.
The graduate trainee will prepare
further target stock level supporting
data.
Once the Purchasing, Pricing
and Stock policy is finalised,
target stock levels will be
used to periodically monitor
stock levels in the Period End
Reporting Pack.
Detailed analysis will then be
prepared by the graduate
trainee
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 8
Ref Agreed action Owner and
due date
Status Further action required and
due date
31 December 2013
10
Review of stock levels will be
included in the periodic
Trading Executive Board
report.
Chris Gilbert
1 April 2013
Satisfactorily addressed
Stock levels will be presented at the
next Trading Executive meeting in
September 2013.
Priority 2 actions
11
A detailed Goods In process
will be trialled to determine a
more accurate GRNI accrual
in P12 and P13 of 2012/13.
The process will be reviewed
in P1/P2 of 2013/14 and a
decision taken as to the way
forward in Q2.
Terry Noonan
30 J une 2013
Satisfactorily addressed
At Period 5, the Finance Consultant
implemented a process that bases
the GRNI accrual on the detailed
Futura receipts listing.
12
Lack of resources means that
adequate segregation cannot
be achieved. However,
reports will be included in the
Period End Reporting Pack to
allow Finance greater
oversight of receiving
activities (the ‘Segregation
Review’).
Terry Noonan
1 April 2013
Satisfactorily addressed.
The Trading Department has
implemented several improvements
for segregation of duties, such as
re-allocating and formalising
responsibilities for ordering,
receiving, and entering receipts in
Futura.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 9
Ref Agreed action Owner and
due date
Status Further action required and
due date
Combined with Finance’s review of
significant Purchase Orders and the
GRNI accrual, adequate
segregation of duties has been
addressed as far as possible.
13
A work instruction relating to
stock responsibilities will be
issued to any CSA working in
this area.
J anette
Palmer
1 April 2013
Satisfactorily addressed
Two recent instructions were issued
to brief and train CSAs :
? Stock transfer process
? Mail order briefing
14
The Period End Reporting
Pack will include discrepancy,
damaged stock transfers and
miscellaneous adjustments
reports.
Terry Noonan
1 April 2013
Satisfactorily addressed
The Period 4 Reporting Pack
includes damaged stock and
miscellaneous adjustments reports.
15
The Damaged Stock report
will be signed off by the Head
of Trading each period.
Mike Walton
1 April 2013
Partially addressed
The Head of Trading has not signed
off the report yet due to leave.
The Head of Trading is to
sign off the damaged stock
reports. In the interim,
Finance will sign off where
amounts are significant
30 September 2013
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 10
Ref Agreed action Owner and
due date
Status Further action required and
due date
16
Data warehousing continues
to be developed and will
allow easy analysis of data in
all areas, and specifically for
stock:
? Requirement for
replenishment ordering by
product and priority.
? Slow-moving stock in
terms of monthly sales.
? GRNI reporting.
? Stock adjustments.
Chris Gilbert
31 J uly 2013
Partially addressed
Apart from an analysis report for
order replenishments, the other
analysis reports have been
implemented and are part of the
Period End Pack.
The Data Warehousing
project will be taken forward
before March 2014.
No further action is to be
taken on the outstanding
report (order replenishment)
and it is not considered a
priority.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 11
APPENDIX 1 – Distribution list
This report was sent to Sam Mullins, Director, London Transport Museum, by
Clive Walker, Director of Internal Audit, and copied to:
Memet Bunyan Retail Manager, LTM
Nicky Ward Business Operations Manager, LTM
Michael Walton Head of Trading, LTM
J ennifer Farr Stock and Business Analyst, LTM
Chris Gilbert Assistant Director, Business and Performance,
LTM
Terry Noonan Finance and Assurance Manager, LTM
J anette Palmer Head of Customer Services, LTM
Roger Cooke Chair of LTM Audit Committee
Sir David Bell Chair of the LTM Board
Vernon Everitt Managing Director, Marketing &
Communications, TfL
Martyn Loukes as Key Risk Representative, M&C
Nigel Blore Head of Group Insurance
Andrea Clarke Director of TfL Legal
David Goldstone Chief Finance Officer
Howard Carter General Counsel
Nicola May KPMG
The report will be copied to the Commissioner and the Chairs of the TfL Audit
and Assurance Committee and the LTM Audit Committee at the end of the
period.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 12
APPENDIX 2 – KPMG Highlights Memorandum 2013 status of 2011/12
actions
KMPG
Observation
Management
action
KPMG update at 31
May 2013
LTM update at 30
August 2013
Goods inwards – stock costing
We noted that the
lack of
descriptions and
barcodes on the
purchase orders
resulted in
inappropriate
booking-in of
stock.
When booking the
purchase orders in
the Futura
System, the
associated unit
price must be
input.
When the goods
relating to this
purchase are
received, the user
is able to update
the value,
however no such
opportunity is
offered at the time
of booking in the
invoice.
Our audit work
identified
inconsistencies
between unit
prices recorded in
the stock system
and the actual
amount.
Bar codes for
new products to
be reviewed.
Staff training
guidelines to be
reviewed.
Regular
monitoring
process to be
introduced and
product lines
with zero levels
to be removed.
The availability of
barcodes on stock
items remains a
work in progress
due to the wide
nature of stock
items held by the
Museum.
We observed the
goods receipting
process and
confirmed that
product descriptions
were being
reviewed to ensure
that items were
recorded correctly.
We also confirmed
that there is an
ongoing effort to
increase the level of
training and support
offered to staff.
Further work is
required in relation
to zero stock lines
as well as
investigation of
negative stock lines.
Review of
barcodes is
planned, but is not
a current priority.
Staff training - see
action at 13 above
Zero and negative
stock is included in
the Period End
pack for review by
Finance.
London Transport Museum Stock (12 126/F)
TfL RESTRICTED Page 13
KMPG
Observation
Management
action
KPMG update at 31
May 2013
LTM update at 30
August 2013
Stock movement
We noted that
when stock was
moved from one
site to another
there was a delay
in recording this in
Futura.
All stock
movements to
be recorded in
Futura
immediately
and cover will
be arranged for
when the Stock
Analyst is away.
Issues continue in
relation to the
recording of
information in
relation to stock
items when
transported between
sites.
Processes may be
improved by
creating a branch
within the Futura
system specifically
for items in transit.
This would enable
stock to be recorded
as leaving Acton
and then separately
recorded as arriving
at Covent Garden.
Any discrepancies
could then be easily
identified and
investigated.
A revised transfer
procedure was
issued on 25 J uly
2013.
This states that all
transfers should be
accompanied by a
list of stock items,
signed by the
initiator and
approved by the
Trading
Management
Team.
The Acton
Warehouse
Receiver has been
given access to
Futura so that he
can prepare
transfer lists. He
will be trained w/c
23 September
2013.
Stock count plan
Management had
planned to ensure
that cyclical,
periodic counts
were performed
throughout the
year; instead there
was one full count
at the end of
February.
Stock count
schedule to be
reviewed each
period.
High value
stock to be
identified and
reviewed three
times per year.
The stock count
schedule was
revisited with high
value items being
subjected to counts
throughout the year.
Despite this we
identified issues in
relation to the
accuracy of stock
counts which
require that further
improvements are
made.
An appropriate
count schedule has
been issued for
2013/14. The first
count is being
reviewed by
Finance.
This is a focus of
the September
Audit Committee
who will discuss
stock control in the
context of the
process
documentation
being prepared.
doc_508752315.pdf