Internal Control Checklist/Questionaires/Assessment On Manufacturing Operation

Using the salient points below, you are able to establish internal control checklist and or statement of policy of your company’s manufacturing operations:

• Policies and procedures for production planning, production process, modification process, quality control, equipment maintenance, scrap and security should be clearly documented and communicated.

Production/Modification Planning
• Standard documentation should be used to communicate sales orders and production/modification requirements to production personnel.
• Production/modification schedules should be compared to sales orders to ensure that production timing and quantities are appropriate.
• Production/modification schedules should be reviewed and approved by an appropriate officer.
• Standard documentation should be used to communicate material requirement plans (including quantities and dates) to the purchasing department.
• Material requirement plans (MRPs) should be compared to production/modification schedules weekly to ensure that quantities and timing (including the effect of lead times) are appropriate.
• Instances of insufficient or excessive raw material inventory should be monitored weekly/monthly.
• The MRP should be based on accurate and up-to-date bill of materials (BOM).Production/Modification Process
• Employees should be trained in the use of the equipment.
• Employees should be trained to perform a number of tasks to provide cover for other skilled employees.
• Continuous improvement initiatives should be pursued in the following areas:
– set-up and change-over time reduction
– travel distance reduction within the entire manufacturing process
– plant layout simplification and physical flow improvement
– visual control systems to surface problems quickly
– materials and tools stored at point of use rather than storerooms
• Management should review and follow-up daily/weekly on:
– order book status and order intake trends
– production volumes and variances by product and location
– machine utilisation rates
– production efficiency data (e.g. usage, scrap, rework etc.)
– scheduled and unscheduled downtime
– inspection and testing results
– product quality data (defects, failures, customer complaints, warranty costs etc.)
– output per employee and per productive hour
• Production performance measures should be benchmarked internally and against other organizations, including:
– machine utilisation rates
– materials usage costs as a percentage of total production costs
– scrap and rework levels
– scheduled and unscheduled downtime as a percentage of total production time
– inspection and testing costs as a percentage of total production costs
– defect and failure rates
– warranty and product liability costs as a percentage of total production costs
– customer complaint and return rates
– material stock levels divided by average daily usage employee productivity levels

• The costing of the modification job should be approved by an appropriate officer.

Quality Control
• There should be formally documented instructions / procedures on:
– tests to be performed at each stage of the production process
– steps to be taken in the case of negative results
– documentation required to evidence completion and results of quality checks
• Sufficient quantities of each production run should be tested to enable compliance with quality control standards to be assured.
• Quality assurance procedures should be integrated into the production process.
• Defect rates, customer returns and complaints due to poor quality should be monitored.
• Measuring equipment and devices should be calibrated at least once a year.

• Responsibility for all aspects of equipment maintenance and management should be clearly defined.
• There should be a planned program for scheduled preventative maintenance.
• Production equipment should be maintained in accordance with:
– manufacturers specifications
– contractual agreements
– legal requirements

• Scraps should be classified and segregated for most profitable disposition.
• Weights of scrap sold should be determined and verified independently.
• Scrapping process should be witnessed by independent company personnel.

• Sensitive areas should be identified should include:
– inventory storage and handling
– high value part storage
– shipping and receiving
– vaults
– toxic materials
• Entry and exit points for sensitive areas should have appropriate security controls such as:
– security personnel
– gate passes
– restricted access mechanisms
– card keys
– cameras and lighting
– perimeter fencing
• Smoke detection and fire-fighting equipment should be functional and provide adequate protection.
• Equipment and evacuation procedures should be tested on a regular basis and documented.
• Security incidents should be formally reported and tracked.

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