Internal Control Checklist/Questionaires/Assessment on Inventory,Logistics And Distribution

July 2nd, 2009 Comments off
Share |

Do you want to set up an audit checklist to ensure that there are proper internal controls for your company’s Inventory, logistic and distribution?
Append below are some suggested salient internal controls points for inventory, logisticand distribution:

General

  • Policy and Procedures should be defined and documented for Inventory Management.

Ordering

  • Purchasing decisions should be made after taking into consideration the product type, market conditions as well as “value for money” criteria, i.e. quality, optimal quantity, economical pricing, timeliness of delivery and alternative sourcing.
  • Re-order quantity should be determined by taking into consideration the following:

Sales volumes
Perishability
Buffer stock requirement
Delivery lead-time
Economical price
Optimal quantity
Inventory Control

  • The purchaser should define each product line’s optimal holding level.
  • Respective product line purchaser should review stock levels on a weekly basis against the optimal.
  • High stock level and slow moving stocks should be highlighted and reported on a monthly basis to top management.

Disposal of Stocks

  • All stock phase-out should be approved by both the Functional Manager and Financial Manager and authorised by the Executive Committee (EXCO).

Price Setting

  • Selling prices for products should be in accordance with written pricing guidelines laid down by suppliers.

EXCO should review prices set by suppliers on an ongoing basis.
Receiving and Inspection
Goods received should be counted and inspected by end of working day of receipts to ensure they are in accordance with the order and suppliers’ delivery documentation.  Differences should be promptly documented for follow up actions.
Designated goods receiving and inspection points should be separated from storage area.
Access to receiving point should be restricted to authorised personnel only.
Receiving documents (e.g. Goods Receipt Note) should be raised for all receipts of goods.
Receipts of goods should be done by persons independent of the requisitioning department.
Receiving documents should be pre-numbered and sequentially controlled.
· Rejected stocks should be physically segregated from good stocks.
Inventory

  • Stock record should be detailed according to stock quantities and locations by individual items.
  • All stock movements should be supported by formal pre-numbered documentation, appropriately authorised and recorded within the same working day.
  • Obsolete, old, slow moving, excess and damaged stocks should be identified and reported monthly to the Chief Finance Officer (CFO).
  • Specific and general provisions should be reviewed quarterly in light of the stock conditions, ageing and turnover.
  • Stock write-off should be approved in writing in accordance with the authority limits and counter-signed by the EXCO regardless of the amount involved.
  • Stocks should be stored in secure areas and access to the stocks should be limited to authorised personnel only.
  • Warehouse supervisor and security guards should perform spot checks on employees’ personal belongings at the end of working day once every fortnight.

Stock Check

  • Physical stocks at all locations should be checked against book records (at least once a year) through continuous cycle counts. Higher value items should be checked more frequently (three times a year).
  • Differences between stock counts and book records should be investigated thoroughly before adjustments are approved. Results from investigation should be documented and reported back  to Head Office within 2 weeks from date of stock count.

Outbound Logistics

  • Warehouse should obtain customer orders at fixed times during each day and consolidate the orders for picking.
  • Delivery documentation should be generated and checked against the products picked by someone other than the initial picker.
  • Stock should be picked on a First-in-First-out (FIFO) basis where applicable.
  • Acknowledged Delivery Notes should be returned and filed.
  • Warehouse Supervisor should maintain a schedule of deliveries based on customer orders and actively monitors the schedule to ensure timely delivery.
  • Outstanding orders should be monitored using a control listing.

Customer Returns

  • Sales Department should inform the Warehouse and Procurement Department on any goods returns.
  • Undamaged goods should be returned to normal storage and taken up as normal inventory.
  • Damaged goods should be separated from undamaged goods at the warehouse premises.

Training of Warehouse staff

  • Warehouse staff should be provided with the necessary skills to operate warehouse systems and equipment and be trained on warehouse operations and procedures.
  • Continuous on the job training, feedback and supervision must be provided by Warehouse Supervisors.

Freight Forwarding
· Key service performance indicators for freight forwarders should be identified and measured.
· Forwarder and freight charges should be verified and approved before payments.
· Delivery reliability should be measured monthly by comparing promised to actual dates and for reviewed by the senior management.
Warehouse Safety

  • A Safety Officer should be appointed to deal with safety related issues.
  • Fire and health safety procedures should be defined and documented.
  • Sufficient fire-fighting equipment should be available at strategic locations in the warehouse. Smoke/Fire Detection System should be installed where possible.
  • All warehouse staff should be trained to handle fire-fighting equipment and emergency situations relating to fire and personal safety.
  • Emergency exits must be kept clear at all times.

Segregation of Duties

  • There should be segregation of duties between the following functions:

purchase order creation /amendment
custody and receiving of stock
updating of stock records
Delegation of Authority (DOA)

  • There should be segregation of duties between the following functions:

Stock provision and write-off
Stock  movements

Comments are closed now.

Financial Accounting

 
 

Advertise Here | Brain Teasers/Puzzles | Greeting Cards | Inspirational Quotes | Jokes/Humor | Useful Links | Motivational Stories | Resource | Shopping | Share/Express Your Views | Testimonials | Universities/Colleges | Words of Wisdom from Religions | FREE POSTING OF ACCOUNTING & FINANCE JOBS VACANCY|