Spreadsheet: sally_beck__33937__Summary EMR Integration Plan
Sheet: Sheet1

Controls Objective | Controls environment at 31/12/00 | Controls Assessment at 31/12/00 | Action Plan (to achieve desired level of controls - denoted by L3, L4, L5) | Latest Completion Date | Responsibility | Comments | Implementation Progress - 31/1/01 | Revised Controls Assessment at 31/01/01
Control over Cash | Cash managed for MGMR by Back office in Hamburg and Frankfurt.  [NAME] cash management centralised in Essen.  Multiple bank accounts and funding mechanisms.  Double signature on bank accounts and segregation between front and back office. | 2 | L3: Centralise cash management into Essen and ensure that there are adequate controls over payments. | 2001-01-31 00:00:00 | Jaeger | Effective 1 January the cash management has been centralised to [NAME]. From February, funding of bank accounts to be managed through Enron and overdrafts closed down. Clarification over payment order sign off and masterdata controls in process. |  | 3
 |  |  | L4: Fund Essen bank accounts centrally through London. | 2001-03-31 00:00:00
 |  |  | L5: Centralise cash management into London with new automated payments process (in development in London). | 2001-06-30 00:00:00
Controls focused commercial management | Bergman team very much from a controls background.  MGMR team used to controlling by management supervision rather than transparent operating control structure.  Some practices that were previously normal are contrary to Enron policies. | 2 | L3: Reorganise local commercial management to ensure Enron values are applied. | 2001-02-09 00:00:00 | Gold | The Commercial lead who moved over with the Bergman acquisition will be appointed as head of Recycling.  We are identifying a strong Enron commercial integrator who will have full responsibility to oversee implementation of integration plan.
 |  |  | L4: Appoint Enron commercial co-ordinator. | 2001-02-28 00:00:00
Segregation between commercial and commercial support | Segregation between front and middle office lacking due to reporting lines.  However in both MGMR and Bergman there is segregation between trader and forwarder and all back office and cash management is completely separate. | 2 | L3: Centralise documentation into Essen | 2001-03-31 00:00:00 | Cornfield/ Commercial co-ordinator | Unity of commercial and commercial support management is required to achieve segregation as this will involve considerable organisational changes. The appointment of an Enron Commercial integrator will facilitate the process.  Some exceptions to centralisation may be required with specific controls e.g. local cheque payments to small suppliers from limited funds in a segregated bank account with daily reconciliation processes and systems cheques to ensure deal capture.
 |  |  | [NAME]; Centralise settlements into Hamburg and [NAME] and segregate from commercial teams.  Set up co-ordination group across all sites reporting into commercial support | 2001-06-30 00:00:00
Manage and control positions | Individual positions managed by head trader for MGMR and for [NAME] and sent via excel spreadsheet to London. Independent risk manager from London present in Hamburg and Bergman risk manager active in Essen. Informal review and discussion of variations. | 2 | L3: Centralised DPR to be signed off by traders and variations in position to be fully analysed by new risk management function | 2001-02-15 00:00:00 | Cornfield | Centralised DPR is now reviewed and signed off by traders.  Analysis tool being implemented - changes currently reviewed manually. Mercur feed due to go live beg Feb, this will allow centralised limit monitoring as for the rest of metal business.  FX yet to be centralised fully. |  | 3
 |  |  | L4: Position reports and feeds to London to be automated.  FX to be managed centrally in London | 2001-03-31 00:00:00
Adequacy of trading controls | Informal controls by head traders over their junior traders.  All deals over 100 tones discussed with Hamburg.  Bergman team have automated trading controls incorporating limit structure, e.g. system fixes price bands. | 2 | L3: Ensure that traders list is revised for Bergman acquisition, is fully agreed and communicated. | 2001-02-09 00:00:00 | Heil | Hamburg and [NAME] will be trading locations with Frankfurt and Nurenburg as agency locations.
 |  |  | [NAME]: Ensure that agency trading limits are communicated. | 2001-02-09 00:00:00
 |  |  | L5: Ensure that agency vs. trading office split is achieved | 03/31/01
Counter party risk management | [NAME] have credit insurance and clear credit limits for each counter party implemented in their system.  Masterdata controls exist through segregation of duties.  MGMR have informal credit limit structure and no insurance.  Suppliers are not background checked. | 2 | L3: Implement & review credit limits for all counter parties. | 2001-02-28 00:00:00 | Scutt | Credit team in London are taking the lead to ensure that this is implemented.  Currently all MGMR customers are being input to the system and credit insurance/credit checking taking place on each of them.
 |  |  | [NAME]: Tighten up masterdata controls.  Establish links to GCP and Credit systems in London. Extend insurance to all counterparties. | 2001-03-31 00:00:00
 |  |  | L5: Implement background checking of suppliers, debtors ageing reports, annual credit limit review | 2001-04-30 00:00:00
Validity and quality of deals | For each deal there is segregation between trader and forwarder (contract management) but these all report into commercial.  The forwarder is responsible for ensuring that all details on a deal correspond and for organising payment/collecting receipts. | 2 | L3: Short term fix is a commercial support review of all documentation prior to payment. | 2001-01-31 00:00:00 | Cornfield | In the short term an independent reviewer has been appointed to sign off on completed deal files prior to payment.  Long term solution is to have strict masterdata controls and supplier validation with checks and balances as documents pass through the system. |  | 3
 |  |  | [NAME]: Ultimately this will be achieved by the implementation of controls to ensure matching between all stages of documentation, adequate review and authorisation and to identify anomalies. Key to this is the segregation of middle office. | 2001-06-30 00:00:00
Inventory Management | Permanent inventory is not always up to date.  Yard managers and traders control inventory largely by sight and manual controls. Physical inventory is taken annually. Reliance is placed on traders' knowledge of grades in order to place valuation on inventory. Inventory balance at year end was c$50million.  Physical inventory was performed at all sites and audited at year end. | 2 | L3:  Price testing of inventory and discounts. | 2001-02-09 00:00:00 | Cornfield | The discount table used for valuation is revised monthly and agreed with middle office.  Inherent complexities of the recycling business relating to the real metal content of individual deliveries, effects of mixing and transformation to be overcome.  A detailed analysis is in the process of being completed to provide the systems improvements spec.
 |  |  | [NAME]:  Systems improvements to enable Goods Received notes and delivery notes to be linked directly to the inventory system. | 2001-04-30 00:00:00
 |  |  | L5:  Co-ordination function implemented.  Independent periodical physical checking in place | 2001-06-30 00:00:00
System adequacy | MGMR system unreliable and not linked between sites.  Bergman system has 80% of required controls and can be implemented across all sites. | 2 | L3: Ensure that the Bergman system is implemented on all sites, transfer all MGMR contracts. | 2001-01-31 00:00:00 | Jaeger | MGMR system scrapped.  Combined business now functioning on Bergman system. Systems improvements in process of identification and training program for Hamburg and Frankfurt during February. |  | 3
 |  |  | L4: Identify systems improvements required to achieve further controls enhancements. | 2001-06-30 00:00:00
[NAME] and timeliness of reporting | DPR and TB Reports sent independently by site.  Difficulties in meeting deadlines.  MTM adjustments to be refined and automated. | 2 | L3: Ensure DPR and month end reporting feeds to Enron reporting systems | 2001-01-31 00:00:00 | Jaeger | Risk systems and monthly reporting feeds are well advanced.  Credit and Cash management feeds in process of development. |  | 3
 |  |  | [NAME]:  [NAME], Risk and Cash reporting feeds | 2001-03-31 00:00:00
OVERALL CONTROLS ASSESSMENT
1. No acceptable controls in place
2. Below average controls in place
3. Average controls in place
4. Good controls in place
5. Excellent controls in place