ADEQUATE BUSINESS SYSTEMS

J&M Financial Services, Inc. (J&M) Internal Audits are executed by independent and competent personnel to ensure that the Quality Operating System (QOS) remains effective and relevant to the needs and requirements of our customer. Our Audits are specific to US Government Contracts, and are enhanced mirror images of audits that you will encounter when dealing with DCAA and DCMA

Internal Audits are designed to detect gaps and weaknesses in the QOS without assigning blame to individuals.

The Internal Audit System is a vital link to the continuous improvement process. Corrective actions identified during the Internal Audits are to be implemented in a timely manner.

Purpose - The purpose of this requirement is to ensure that the QOS is functioning as planned, implemented effectively, and that the working environment is in conformance with applicable documentation.

Scope - This description outlines the internal audit planning, implementation, scheduling, reporting, and follow-up. This procedure shall apply to all organizational units.

Process -  All financial related functions shall be audited at least annually and coordinated with the clients designated representative. Customer, other quality audits, or certifying agency audits, when documented shall serve to supplement information to management for the overall effectiveness of the QOS and performance status.

System audits performed by external sources may not serve as a substitute for J&M Internal Audits. However, such audits shall be conveyed to J&M management to assist in the review of the QOS.

Scheduling - On an annual basis, the clients designated representative is presented an annual risk assessment that includes the schedule for Internal Audits. The frequency of each audit is dependent on the perceived exposure, type of work, importance of the activity being audited, and the size of the activity. Additional audits will be performed if the system performance indicates the possibility of an inadequate or faulty process.

Audits are performed by qualified and trained auditors who do not have direct responsibilities in the areas being audited. Auditors are drawn from the resources of the company. They will be trained in auditing techniques by internal and external training classes, reading or observation. Auditors will have an understanding of the standards, and complexities of Government Contracting.

Independent Audits - Internal Audits shall be carried out by personnel independent of those having direct responsibility for the activity being audited.

Reporting - The designated lead auditor for each audit is responsible for the planning, performance, reporting, follow-up and closure of the audit.

Results of the audit are recorded, documented, stored and brought to the attention of the personnel having responsibility for the audited area. Each site will send a copy of the completed scheduled audit reports and resulting Corrective/preventative Actions (CPA) to the Compliance Department no later than the 20th of the month following the scheduled audit. The organizational unit will take timely corrective actions to correct the deficiencies found by the audit. The results of the audit are brought to the attention of management for review and possible further corrective and/or preventative action.

Follow-Up - Follow-up audits are conducted by the lead auditor or designated representative to verify and record the implementation and effectiveness of the corrective action. Follow-Up audits are performed with the regularity required to ensure the effectiveness of the QOS and to ascertain the need for further corrective and/or preventive action.