7/31/2019 Blending Plant Operations Audit Protocol

1/18

Audit Template

BLENDING PLANT OPERATIONS Lubricants

CONTROL CONCERN/EXPOSURE SCENARIO

1. Determine whether facility, operating procedures and internal controls relating tolube blending plant operations are adequate to ensure that:

Satisfactory controls exist for the receipt of raw materials into production and the usageof raw materials in blending operations

Usage of blended products in filling operations is controlled

Records of all production activities are maintained

Records of all transfers of finished products to bulk storage tanks or packaged productwarehouses are controlled

Shipments of products blended to customer orders are satisfactorily controlled

Optimizes use of raw materials and blended products is achieved and downgrading andwaste minimized

Accounts accurately for all transactions and inventories in storage

Operates safely and optimizes operating costs.

CONTROL PERFORMANCE INDICATORS

Satisfactory bulk inventory control achieved through:

Accurate measurement of both quantity and specification for

Receipts into production

Blending

Filing

Transfers to finished product inventory/shipment of products blended to customerorders

Downgrading and waste

Effective storage and physical controls

Safety and security

Accurate inventory accounting

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

1. Receipts into Production

The receiving intoproduction are adequatelycontrolled

Are all receipts intoproduction ofbulk/packaged raw

materials supported byauthorizedrequisition/blendingorders?

Are all receipts accuratelymeasured and detailsverified againstrequisitions/blendingorders?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

2/18

Audit Template

based on approvedformulae?

Are formulae adjusted forchanges in specificationsof base stocks oils to be

used?

Have relative priorities forcustomer orders and themaintenance of optimuminventory levels beenestablished?

Are all required materialsin stock for each blendingorder issued?

Blending variations are

identified, controlled,evaluated and authorized

Are finished product

quantities for each blendbatch measuredaccurately?

Are finished productquantitiescompared/reconciled toinputs on a consistentbasis to identify blendingvariations?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

3/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where theexisting practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness ofthe control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

2. Blending

Are flushing and otherwaste oil (slop) producedincluded in the calculationof blending variations?

Are blending variationscalculated for each type ofblended product?

Are blending variationstandards calculated foreach type of blend 9takinginto account of clingage,evaporation, waste etc)?

For each batch, aresignificant variations fromstandard identified,investigated, explanationsdocumented andapproved within delegatedlimits?

Are blending variationssummarized monthly forreview?

Are blending variationsvalued and reviewed priorto processing in theaccounting records?

Adequate quality controlprocedures are in force

Are the specifications ofall finished blends verifiedand approved by the

Laboratory prior to fillingor transfer from theblending tanks

Are results of analyses ofsamples documented?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

4/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

2. Blending

Is laboratory approval forrelease evidenced andissued on a timely basis?

Are samples retained forappropriate periods?

Are off-spec (rejected)batches identified and

controlled?

Are corrections to off-specbatches recorded on theblending orders?

Are adequate effortsmade to re-work orotherwise utilize off-specbatches that cannot becorrected?

Are finished blends whichexceed specificationsidentified, investigated todetermine the reason andto enable corrective actionto be taken for futureblends?

Are finished blendspumped into compatiblestorage tanks?

Are all finished blendsreleased as good, butoutside required

specifications, approvedin writing?

Equipment used formeasuring the inputand/or output fromblending tanks is verifiedfor accuracy

Where meters are used:

Are they calibrated inaccordance withmanufacturersrecommendations?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

5/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or referencedocumentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies theadequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause(if known).

2. Blending

Is their accuracyperiodically verified byalternativemeasurements, e.g.tank gauging?

Are all movements in

cumulative totalizersaccounted for?

Where automatedmechanical tank gaugingequipment is used, is theaccuracy of the equipmentperiodically verified?

Is the accuracy ofthermometers periodicallytested?

Where weigh-scales areused:

Are they recalibratedin accordance withmanufacturersrecommendations andWeights andMeasuresDepartment?

Is their accuracyperiodically tested bycomparison with other

scales?3. Filling

Filling activity isadequately approved

Are filling operationssupported by an approvedfilling order?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

6/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Containers are filled to thecorrect volume/weight

For filling by weight, isaccount taken of varyingtare weights?

For filling performedutilizing automatic fillingscales:

Is the filling

equipmentrecalibratedperiodically inaccordance withmanufacturerrecommendations orWeights andDepartmentsDepartment andresults recorded?

Is test weighing offilled containersperformed and theresults documented toensure the continuingaccuracy of the fillingequipment betweencalibration tests?

Are scales used fortest weighingregularly checked foraccuracy?

For filling controlled on avolume basis, are test

checks made inaccordance with anestablished program andthe results adequatelydocumented?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

7/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve thecontrol objective.

Briefly explain what is the

(current) local controlprocedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to beperformed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead tothat conclusion and the likely cause

(if known).

3. Filling

Have tolerances beenestablished for theguidance of fillingmachine operators as toacceptable levels ofvariations from the

required fillvolume/weight?

Are deliberate overfillsperiodically reviewed toensure minimum contentsrules are met?

Are deviations fromplanned filling identifiedon filling reports and whensignificant, reviewed?

All output from filling

activities is accuratelymeasured, properlycontrolled and accountedfor

Are containers filledaccurately counted andrecorded?

Are empty containersissued to Filling reconciledto containers filled?

Are containers filledreconciled with receiptsbooked into the FinishedProduct Warehouseaccording to the perpetualinventory records?

Are part-filled containersat the end of filling runsrecorded and accountedfor?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

8/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Are empty containersdamaged during fillingwritten off?

Is product in damagedcontainers repackagedand properly accountedfor?

Are numbers of damagedcontainers accumulatedand reported monthly?

Filling variations areidentified, controlled,evaluated and reportedmonthly

Are bulk productsreceived for each fill runmeasured accurately?

Do recorded quantitiesreceived by Filling agreewith quantities reported byBlending?

Are filled quantitiescompared/reconciled toinputs to identify filling

variations?

Are filling variationstandards calculated foreach type of filledproduct?

Are deliberate overfillstaken into account inestablishing standards?

For each fill run, aresignificant variations from

standard identified,investigated, explanationsdocumented andreviewed?

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

9/18

Audit Template

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Are filling variationssummarized and reviewedmonthly prior toprocessing in accountingrecords?

Adequate quality controlprocedures are in force

Have samplingprocedures for filledpackages been

established and are beingfollowed?

Are laboratory tests andapprovals documented?

Is laboratory approvalobtained prior toshipment?

Are quality controlinspections made afterfilling to ensure correctpackaging and detectionof damaged or leakingcontainers?

Filling performed byoutside parties iscontrolled and properlyaccounted for

Does a written agreementexist detailing theagreement and theresponsibility of eachparty?

Are quantities of productssent for filling reconciledwith the number ofpackages filled?

Has responsibility forfilling variations beendetermined?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

10/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Have filling variationstandards beendeveloped?

Are filling variationsidentified and reported tothe oil marketer?

Are filling variations inexcess of standardinvestigated and theresults reported to the oil

marketer for review?

Where appropriate areexcessive variations billedto the filling contractor?

Where the outside partystores bulk products onconsignment from oilmarketers and dispatchespackaged products on oilmarketers behalf as wellas performing filling

operations:

Are perpetualinventory recordsmaintained?

Are physicalinventories taken withappropriate frequencyby an oil marketeremployee?

Is periodic confirmation

made of quantities heldand numbers of packagesfilled?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

11/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Are outside partyconfirmationsreconciled to theperpetual inventoryrecords?

Is thereconciliation of theperpetual inventoryrecords reviewed?

Are empty containers sentto outside partiesreconciled with containersfilled?

Decanting operations areadequately controlled andreported

Are inputs to and outputfrom decanting correctlyreflected in the perpetualinventory records?

Are empty containersissued to decantingreconciled to filledcontainers?

Are part-filled containersat the end of decantingrecorded and accountedfor?

Are decanting variationscalculated for eachdecanting operation?

Are variations comparedto standard and those inexcess of standard

adequately investigatedand reviewed?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

12/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

3. Filling

Are drums used as inputsto decanting taken into theperpetual inventoryrecords?

4. Transfers to finished product inventory/shipments of products blended to customer orders

Transfers/shipments aresatisfactorily controlled

Are bulk productstransferred from blendingtanks to finished productstorage tanks accuratelymeasured at both

locations?

Are quantities of bulkproducts received intostorage tanks reconciledwith quantities transferredfrom blending tanks?

Are filled containersdispatched to thewarehouse counted,agreed to filling reportsand recorded on inventorytransfer documents?

Are receipts into thewarehouse counted andverified to inventorytransfer documents andthis count/verification isevidenced?

Are differencesimmediately investigatedand followed up untilsatisfactorily resolved?

Are all transfer documentscontrolled and recorded?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

13/18

7/31/2019 Blending Plant Operations Audit Protocol

14/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

5. Downgradings and Waste

Bilk loading flushings

Customer returns

Repackaging ends

Bulk tank truckflushings

Line flushings

Obsolete/unusableraw material stocks

Separator pits

All waste oil movements

are measured accuratelyand accounted for

Are transfers of waste oil

within the facilityaccurately measured(meter, tank gauging, tanktruck gauging,weighbridge) andaccounted for?

Are regular physicalinventories of waste oiltaken?

Are waste oil perpetualinventory recordsmaintained?

Are waste oil physicalinventories reconciled tooperpetual inventoryrecords to ensure that allwaste oil generated,downgradings, sales andusages are recorded?

Are sales and own use ofwaste oil accuratelymeasured?

Downgradings to waste oilare minimized

Are downgradings towaste oil summarized bycause on a monthly basisfor review?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

15/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

5. Downgradings and Waste

Are flushings controlledand minimized?

Are product compatibilitytables available to alloperators and used toavoid unnecessary line ortank flushing?

Downgradings areevaluated and reviewed

Are downgradings valuedat the intended stock priceand reviewed prior to

processing in theaccounting records?

Are the costs of alldowngradings accountedfor during tax and dutypayments?

Sales of waste oil areadequately controlled andreviewed

Are all sales of waste oilauthorized in writing?

Are all waste oil salesinvoiced?

Where sales pricesdepend on the quality/oilcontent of waste, is thequality/oil contentverified?

6. Containers Operations

All movements ofcontainers are recordedand accounted for

Are all new containerspurchased subject tonormal receivingprocedures?

Are all drums received ascontainers for additivespurchased recorded andtaken into the perpetualinventory records?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

16/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

6. Containers Operations

Are empty containersincluded in the perpetualinventory records?

Are regular physicalcounts performed for eachtype of empty container?

Are physical countdifferences investigatedand explanationsdocumented prior to

adjustment?

Are all issues ofcontainers to the fillingline recorded?

Sales of used drums areadequately controlled andauthorized

Are all sales of useddrums authorized inwriting?

Are all used drums salesinvoiced?

Are used drum inventoriesrecorded in the perpetualinventory record?

Are regular physicalinventories of used drumsperformed and reconciledto the perpetual inventoryrecords?

Are differencesinvestigated and reviewedmonthly?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

17/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

6. Containers Operations

Are perpetual inventoryrecords correctly updatedfor the receipt and sale ofused drums?

7. Accounting Controls

All blending and fillingoperations are properlyrecorded and accountedfor

Are all documentssupporting receipts intoproduction, blending andfilling activities, transfersto finished product

inventory and directshipments to customersadequately controlled toensure all are processed?

Are accurate perpetualinventory recordsmaintained for use byproduction planning,blending and warehouseunits?

Are perpetual inventoryrecords adjusted on atimely basis for bendingand filling activities?

8. Safety and Security

Dangerous materials areadequately controlled

Are persons handlingdangerous materialsaware of the requiredlevel of protectiveclothing?

Is adequate protectiveclothing available?

Are dangerous materialssecurely stored?

CONTROL STEPS DESCRIBE EXISTING

CONTROL PRACTICE

CONTROL TEST(S) IDENTIFIED GAP

Contractual Proposal March 2006

7/31/2019 Blending Plant Operations Audit Protocol

18/18

Audit Template

List of control procedures

necessary to achieve the

control objective.

Briefly explain what is the

(current) local control

procedure, or reference

documentation where the

existing practice can be found.

Each control procedure has

an associated test(s) to be

performed that verifies the

adequacy and effectiveness of

the control procedure.

Is there a control gap? If yes, indicate

the information or data that lead to

that conclusion and the likely cause

(if known).

8. Safety and Security

Have disposal proceduresbeen established forsurplus and contaminateddangerous materials?

Contractual Proposal March 2006