Texas Correctional Industries
An Audit Report on Management Controls at * Texas Correctional Industries
November 1997
Report Number 98-004
Overall Conclusion
Neither the Texas Department of Criminal Justice (Department) nor the Board of Criminal Justice has required Texas Correctional Industries (TCI) to demonstrate results or to implement sound controls over operations. As a result, TCI has not implemented sufficient management controls to accomplish its statutory objectives. In addition, TCI has not developed accurate cost or management information to assess factory efficiency, make informed decisions about product prices, or determine factories' profits or losses.
In fiscal year 1996, TCI operated 44 factories that produced uniforms, mattresses, and other items for Department inmates and guards as well as furniture, license plates, and jail steel for external governmental entities. Reported internal and external sales for the fiscal year totaled almost $96 million.
Key Facts and Findings
TCI has not ensured that the 8,000 inmates who work in its factories receive effective vocational training or that factory operations contribute to recovering the cost of incarceration. These goals are encompassed in TCI's five legislative mandates.
TCI has not effectively controlled its operations or developed information to assess the degree to which it has contributed to recovering the cost of confining inmates:
TCI does not use many of the financial indicators commonly used by manufacturing concerns to assess the efficiency of factories' day-to-day operations and has not developed substitute indicators. Implementation of TCI's new information system is more than one year behind schedule. Without this system, TCI management does not readily have access to information which would facilitate production planning, sales forecasting, or other routine management decisions.
TCI's cost accounting system does not effectively track costs or allocate overhead to inventory. Therefore, TCI does not have reliable information to make decisions about pricing or to determine which factories are profitable. *
Controls over TCI's $24.2 million worth of inventory cannot ensure that the raw materials, consumables, and other items purchased for production purposes are adequately protected from theft or loss. *
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