merchanting metals update 2 please find attached recent update merchanting metals summary planned systems changes manual substantiation efforts behind schedule additional resources allocated situation closely monitored quarter end signoff going operations please contact require additional information mike forwarded mike jordan lon ect 04 04 2001 13 59 mike jordan 03 04 2001 16 29 john sherriff lon ect ect michael r brown lon ect ect joe gold lon ect ect michael farmer eu enron enron michael j hutchinson eu enron enron paul freeman eu enron enron cc fernley dyson lon ect ect andrew cornfield lon ect ect howard carter eu enron enron nigel grace eu enron enron mark pickering lon ect ect subject merchanting metals update 2 intention efforts actions documented earlier update see attached email provide robust position signoff process total metal tonnage spread brand location timely substantiation stock balance sheet forward mtm debtors creditor balances obsf transactional values reconciliation barclays intercompany account despite best efforts continuing problems 400 application better understanding inconsistency stock reconciliation reports concerns useability outright stock screen enquiry currently confident delivering sufficient accurate information aa satisfy audit requirements macro level transparent audit trail stock forward positions full accounting values consequently need inform require approval following discuss aa following obsf values within extended trial balance may misstated due data issues beyond existing conversations aa model simplifications reconciling differences trader position analyses 400 screen enquiries formal global position report differences present understood would need provided aa within audit timetable outline internal balance sheet review process described earlier note must reprioritised rescoped see mo work creation incentive payment pool possibly via personal best awards key metals staff continue work exceptionally unsociable hours meet stated objectives signoff additional permanent enron headcount duplicate certain key position control processes ultimately replacing existing traffic staff reconciling difference 15 mm exists reported dpr final accounting p l generated 400 continue investigate potential misstatements system p l result data system valuation problems within month end reporting timeframe however difference may need adjusted following final review signoff system p l values traders recall obsf stock early april retention balance sheet reduced economically viable positions fully reconciled repeatable daily signoff process instigated middle office work prioritised follows stock circularisation initiated close business 23 rd full reconciliation returns current system data traffic co ordination audit stock forward valuation report 30 th replacing planned 23 rd review due system issues requiring full download contract detail later reference reconciliation stock movements 23 rd 30 th sample tests vanilla forward transactions detailed position analysis obsf contracts must reconciled barclays documentation spreadsheet recalculation obsf option premium utilising manually created position analysis circularisation barclays intercompany account comparison cut substantiation analysis debtors creditors partial circularisation initiated close business 23 rd touch directly items needing approval regards mike forwarded mike jordan lon ect 29 03 2001 20 51 mike jordan 21 03 2001 18 20 john sherriff lon ect ect michael r brown lon ect ect rick buy enron enronxgate richard causey corp enron enron ted murphy lon ect ect sally beck hou ect ect cc fernley dyson lon ect ect joe gold lon ect ect michael farmer eu enron enron michael j hutchinson eu enron enron subject merchanting metals update several related issues resulted increase level operating risk merchanting metals business complexities surrounding operation balance sheet facility obsf commenced two weeks year end uncertainty generated revocation aa signoff facility late year end audit discovery number bugs within 400 merchanting code arising release obsf designed functionality compounded operational burden supporting obsf requirement amend operational process obsf code result current renegotiation obsf barclays aa senior developer merchanting resigned sent gardening leave corporate requirement lower working capital usage merchanting business irrespective parochial business issues various mitigating actions taken provide focus gain comfort control levels provide assurance senior management accuracy ql dpr business balance sheet implementation sap merchanting business delayed effectively decoupled higher risk higher benefit brokerage implementation benefit provide sole focus obsf merchanting developers ar ap sap data quality reviews businesses continuing provide detailed analysis end ql middle office instigated new daily working capital report process tracking cash settlement funding data working capital components metals businesses enhanced position signoff process implemented prior end ql covering gross tonnage spread positions summarised analyses brand locations necessary report functionality available within 400 however contingencies initiated build tactical vba excel reports outside 400 using 400 data downloads user requests additional 400 functionality reports aggressively prioritised code freeze commence prior end ql following delivery three reports determined minimum requirements support obsf resubstantiation full ql dpr completed risk control staff reconciling full trial balances ql open ql close full internal balance sheet review completed within ql audit timetable incorporates full circularisation inventory balances matching source documentation within enron inspection certain inventory balances third party inspectors expectation circularisation replies received timely basis substantive checks back source contract documentation forward priced unpriced positions report spot checking key position report signed traders full reconciliation recalculation obsf option premium values full reconciliation contracts within obsf barclays documentation thereby substantiating existence stock option purchase 400 barclays account risk based debtors review matching source documentation applicable subsequent post quarter end cash movements full substantiation creditors internal contract commitments external documentation invoices request payment full reconciliation intercompany accounts full substantive reconciliation cash funding accounts intend provide weekly updates status actions april questions please call x 34703 regards mike