Study this section in conjunction with the Operations section of this help document. The Inventory Control module is designed to record all inventory transactions from these other modules, as well as adjustments, issues, receipts, and physical inventory processing. You should understand how the other modules work to obtain a complete picture of how inventory transactions are processed. If you are using these other modules, refer to their documentation as necessary.
Inventory Control - Inventory Audits and Cycle Counts Inventory Control - Inventory Audits and Cycle Counts Any inventory of Raw materials, finished goods as well as Intermediate in process inventory has an economic value and is considered an asset in the books of the company.
Accordingly any asset needs to be managed to ensure it is maintained properly and is stored in secure environment to avoid pilferage, loss or thefts etc. Inventory control assumes significance on account of many factors. First of all inventory of raw materials as well as finished goods can run in thousands of SKU varieties.
Secondly inventory can be in one location or spread over many locations.
Thirdly inventory may be with the company or may be under the custody of a third party logistics provider. These factors necessitate inventory maintenance mechanisms to be devised to ensure inventory control. Inventory control is also required as an operational process requirement.
Inventory is has two different dimensions to it. On one level it is physical and involves physical transactions and movement of inventory. While on the other hand, inventory is recognizable by the book stock and the system stocks maintained.
This necessitates inventory control mechanism to be implemented to ensure the book stocks and the physical stocks match at all times. Thirdly the inventory always moves through supply chain and goes through various transactions at various places.
Chapter 12 Inventory and Production Cycle. Determine and apply the internal controls over the inventory and production cycle. 5. Design and perform audit tests on cost accounting. 6. Design analytical procedures on accounts in the inventory and production cycle. Procedures flow in inventory cycle (a) Requisition and ordering of. Audit of the inventory and warehousing cycle. Phase III Audit procedures Sample size Items to select Timing Design and perform analytical procedures for inventory Design tests of details of inventory to satisfy balance-related audit objectives Phase III © Prentice Hall BBuussiinneessss PPuubblliisshhiinngg,, AAuuddiittiinngg //ee. The sales and collections cycle in a business refers to the set of processes that begin when a customer purchases goods or services and ends when your business receives payment in full.
The number of transactions and handling that it goes through from the point of origin to the point of destination is numerous. Therefore it becomes essential to control inventory and have visibility through the pipeline including transit inventory.
Inventory control is exercised through inventory audits and cycle counts. An inventory audit essentially comprises of auditing the books stocks and transactions and matching physical stocks with the book stock. Cycle count refers to the process of counting inventory items available in physical locations.
Depending upon the nature of inventory, number of transactions and the value of items, cycle count can be carried on periodically or perpetually. Normally where the number of SKUs is very high coupled with high n umber of transactions and through put, daily cycle count is initiated, where in a certain percentage of locations or SKUs are counted on daily basis and physical stock is compared with system stock.
By the end of the month all of the stocks would have been covered once in cycle count.
Inventory system throws up a count list based on an analysis of the movements of fast moving SKUs along with other attributes like value etc. In some of the system, inventory controllers can set up the attributes for each cycle count.
Wall to Wall Cycle Count: End of financial year and closing of books entails doing wall to wall cycle count of all stocks lying in all locations and tallying with books of account.
This is a mandatory audit requirement and until stock figures are reconciled, certified by auditors and published, New Year books of accounts cannot be started a fresh.
How the audit process works? Except for daily cycle counts, all other cycle counts entail counting hundred percent of all the stocks by stopping all transactions during the counting period. System transactions are also frozen until the count is completed. Inventory system throws up count list with SKU number, description and location number.
The operator goes to the location, checks the SKU, counts the qty available and updates the list, which is then fed into the system. The system reconciles the physical quantity with system quantity and throws up discrepancy report, which is further worked upon to tally and adjust inventory.The Inventory Control module is designed to record all inventory transactions from these other modules, as well as adjustments, issues, receipts, and physical inventory processing.
You should understand how the other modules work to obtain a complete picture of how inventory transactions are processed. Audit of the Inventory. and Warehousing Cycle Chapter 2D 2D - 1 OVERVIEW OF THE INVENTORY MANAGEMENT PROCESS Documents Similar To Warehouse Cycle.
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