Audit Report (Q1 2016)

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Oman National Engineering & Investment Co. (SAOG) Internal Audit Report (1 st Quarter, 2016) Apr-2016 S.No Observation & Impact Recommendation Priority 5 Vehicles lying at Ghala workshop:- On our visit to Ghala workshop to A detailed standard operating physically review the status of the vehicles procedure to be implemented to give M available at the workshop as on the guidelines to handles such issues and brought to our notice. 30.09.2015, the following issues have been periodical basis. all exceptions must be reported on ‣ There are eight vehicles lying in the yard as total loss vehicle after the accident. These vehicles have been lying for years though the actual date is not available as per the workshop personnel. The details of the insurance claim and the status of the recovery are not available. The details of the vehicles have been provided as Annexure 4. However during the finalization of the audit report, the concerned personnel from the logistic department has made necessary follow ups with the insurance companies and other departments to complete the formalities to recover the claim of OMR 38,512. Necessary system modification must be made to update the status of the vehicles in the system such as vehicle at workshop but not in use, vehicles cannot be used and ready for disposal, Vehicles under accident and total loss etc. This system modification will help to make the insurance renewal for the vehicles in use. ‣ The insurance premium also paid for all the total loss vehicles though which is quite sure that these vehicles cannot be used anymore. There are 12 vehicles in working conditions returned from various sites as not required for the use are available in the workshop. However these vehicles have not been allotted to any station. The details of the vehicles have been provided as Annexure 5 Impact:- • Accident vehicles lying for years without any action on insurance claim follow up and disposal shall amount to the loss to the company to the extent of the possible recovery • Loss to the extent of insurance cost incurred for the accident vehicles. Management’s Response:- HR:- All the 8 No’s Vehicles auction and received credit note. Already this 12 Vehicles transferred to different sites. Finance:- • Logistics department is taking care of above points. - 17 -
Oman National Engineering & Investment Co. (SAOG) Internal Audit Report (1 st Quarter, 2016) Apr-2016 S.No Observation & Impact Recommendation Priority 6 Disposal of Vehicles:- On our review of the existing vehicle A third party certification on vehicle disposal process, we have observed status may be obtained before the M following process weaknesses in the system. disposal of the vehicle ‣ As per the existing practice, the vehicles may be disposed after 6 years of use with the recommendation of the workshop in charge as the vehicle is beyond A written policy duly approved by the Board must be in place to provide detail guidelines on the disposal of economical repair. However there is no vehicles. policy of getting a third party certification on the vehicle status to decide the vehicle is beyond economical repair and the vehicle has to be disposed off. ‣ The disposal approval in the system is with the Finance department and there is no system of workflow document approval by Logistic and Legal. In short, a vehicle may be written off in the system by the finance department without getting any system approval from any other departments. ‣ On our review vehicle disposal documents since 2013, it has been observed that the Company follows the practice of vehicle disposal to staff at a rate book value plus 10%. However there is no written approved policy to support the practice followed. ‣ No records of vehicle disposal to the staff for the previous period have been provided to check the number of procurement made by each staff for a particular period. As a matter of fairness the purchase option may be exercised by any of the company staff with equal privilege. ‣ As per the process explained by the logistic department, the vehicles ready for the disposal shall be finalized by the logistic department and displayed in the notice board for staff sale. The staff may select the vehicle from the details provided in the list and request for the purchase. However from the review of disposal records, there is no such reference made in the staff request letter and the request have been made directly to the CEO office. All the staff request should have the reference number of the logistic departments vehicle disposal advertisement. ‣ The open auction is carried out Ghala workshop under the supervision of - 18 -
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Audit Report (Q1 2016)

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