Inventory Management - Internal Control Checklist
Content
ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
MANAGING INVENTORY
Inventory is salable or usable.
The salability of finished goods and usability of raw materials are assessed regularly including a review during physical inventory counts. Inventory is stored in properly secured and environmentally conditioned warehouse locations where access is restricted to authorized personnel. Rejected raw materials are adequately segregated from other raw materials and regularly monitored to ensure timely return to suppliers. Inventory aging reports are prepared and analyzed regularly. Management monitors the adequacy and appropriateness of inventory levels. Rejected finished goods are adequately segregated from other finished goods and are monitored to ensure timely disposition. System functionality monitors and maintains inventory levels in accordance with organization policies.
Obsolete, excess, and damaged inventories are adequately segregated from other finished goods inventories and are monitored to ensure appropriate and timely disposition.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory is adequately safeguarded.
Inventory is stored in properly secured and environmentally conditioned warehouse locations where access is restricted to authorized personnel. Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note). Goods are delivered only to designated, physically secure locations within a warehouse or storage building and are accepted only by authorized personnel.
Adjustments to inventory prices or quantities relate to valid price changes and physical inventory differences.
Management reviews and approves all recorded adjustments to inventory prices or quantities. All inventory adjustments are compared to authorized source documents to ensure that they were accurately input. Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Inventory adjustment forms are sequentially pre-numbered; the sequence of such forms is accounted for.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
All adjustments to inventory prices or quantities are recorded.
Management reviews and approves all recorded adjustments to inventory prices or quantities. Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Inventory adjustment forms are sequentially pre-numbered; the sequence of such forms is accounted for.
Adjustments to inventory prices or quantities are recorded timely and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and the inventory records are reconciled to general ledger. Management reviews and approves all recorded adjustments to inventory prices or quantities. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. If a nil pick or short pick occurs, or if the inventory system shows that a storage location is empty, an inventory count request is automatically generated and followed up.
Adjustments to inventory prices or quantities are recorded accurately.
Management reviews and approves all recorded adjustments to inventory prices or quantities. All inventory adjustments are compared to authorized source documents to ensure that they were accurately input. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Inventory adjustment data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
RECEIVING AND STORING RAW MATERIALS
Raw materials are received and accepted only if they have valid purchase orders.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
When goods received are matched to open purchase orders, receipts with no purchase order or that exceed the purchase order quantity by more than an established amount are rejected.
Raw materials received are recorded accurately.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Goods received input data is edited and validated; identified errors are corrected promptly. Purchase requisitioning, purchasing, inventory management, and accounts payable functions are performed by an integrated application system. The general ledger is automatically updated for receipt and disbursement transactions.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
All raw materials received are recorded.
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for.
Supplier statements are reconciled to goods receipt records regularly.
Invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific management approval. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Receipts of raw materials are recorded timely and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
YES
NO
N/A
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period.
Supplier invoices and credit notes received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific management approval.
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Purchase requisitioning, purchasing, inventory management, and accounts payable functions are performed by an integrated application system. The general ledger is automatically updated for receipt and disbursement transactions.
ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Defective raw materials are returned timely to suppliers.
Rejected raw materials are adequately segregated from other raw materials and regularly monitored to ensure timely return to suppliers. Defective raw materials received from suppliers are logged; the log is monitored to ensure that the defective goods are returned promptly and that credit is received timely.
REQUISITIONING MATERIALS
All transfers of raw materials to production are recorded accurately and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g.production, finished goods storage) and are recorded in the appropriate period.
Raw materials received by production are logged; the log is reconciled to raw material movement reports that are used to record movements of inventory in the financial records. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system.
PRODUCING/ COSTING INVENTORY
All recorded production costs are consistent with actual direct and indirect expenses associated with production.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All direct and indirect expenses associated with production are recorded as production costs.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All direct and indirect expenses associated with production are recorded accurately and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All transfers of completed units of production to finished goods inventory are recorded completely and accurately in the appropriate period.
Finished goods sent to the warehouse are logged; the log is used to ensure that all finished goods are recorded in the inventory records.
All defective products and scrap resulting from the production process are valid and recorded completely and accurately in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Rejected work in progress is adequately segregated from other work in progress and is monitored to ensure it is scrapped or reworked on a timely basis. Management, based on their knowledge of day-to-day activities, reviews records of scrapped and reworked items and checks whether such items have been correctly identified and properly recorded in the appropriate accounting period.
HANDLING FINISHED PRODUCTS
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g., production, finished goods storage) and are recorded in the appropriate period.
Goods received input data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Finished goods received from production are recorded completely and accurately in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g. production, finished goods storage) and are recorded in the appropriate period.
Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Goods received input data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Goods received from production or returned by customers are only accepted in accordance with the organization’s policies.
Quality control inspections are performed for finished goods returned by customers and/or received from production to assess whether such goods should be returned to inventory, reworked, or scrapped.
SHIPING FINISHED PRODUCTS
All shipments are recorded.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Management reviews relevant sales, accounts receivable, costs of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions.
Delivery notes are sequentially numbered; the sequence of delivery notes processed is accounted for.
Orders are sequentially numbered. The sequence of orders processed is accounted for. Shipments of goods to customers are logged. The log is used to ensure that all shipments are invoiced and that all invoices are recorded. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note).
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Shipments are recorded accurately.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody and recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon. Data input to the invoicing subsystem is compared to priced order and shipment data per the separate, nonintegrated order entry and/or shipping applications; differences require management approval before invoices can be processed. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions. Bar code scanners are used to input actual inventory picking and storage locations and quantities; differences from picking and storage instructions are investigated. Shipping transaction input data is edited and validated; identified errors are corrected promptly. Data transferred from the order entry subsystem to the shipping and invoicing subsystems is balanced; identified errors are corrected promptly. Shipment data and/or backorders are input in batches. Batches are balanced and out-of-balance batches are corrected timely.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Shipments are recorded timely and in the appropriate period.
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods shipped at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate accounting period, including the raising and recording of the related invoice. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions.
Inventory is relieved only when goods are shipped with approved customer orders.
Before goods are shipped, the details of the approved order are compared to actual goods prepared for shipment by an individual independent of the order picking process.
Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note). Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Costs of shipped inventory are transferred from inventory to cost of sales.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Costs of shipped inventory are recorded accurately.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Amounts posted to cost of sales represent those associated with shipped inventory.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Costs of shipped inventory are transferred from inventory to cost of sales timely and in the appropriate period.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
MAINTAINING INVENTORY MASTER FILE
Only valid changes are made to the inventory management master file.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Recorded changes to inventory master file data are compared to authorized source documents to ensure that they were input accurately. List prices of composed products are automatically calculated based on the list prices of components of such products. Significant changes to the inventory master file are approved by management.
All valid changes to the inventory management master file are input and processed.
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Requests to change inventory master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. Requests to change inventory master file data are submitted on prenumbered forms; the numerical sequence of such forms is accounted for to ensure that all requested changes are processed timely. List prices of composed products are automatically calculated based on the list prices of components of such products.
Changes to the inventory management master file are accurate.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Requests to change inventory master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. Requests to change inventory master file data are submitted on prenumbered forms; the numerical sequence of such forms is accounted for to ensure that all requested changes are processed timely. List prices of composed products are automatically calculated based on the list prices of components of such products.
Inventory management master file remains pertinent.
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. The salability of finished goods and usability of raw materials are assessed regularly, including a review during physical inventory counts.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
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Prepared By: ___________ Date: ___________
YES
NO
N/A
MANAGING INVENTORY
Inventory is salable or usable.
The salability of finished goods and usability of raw materials are assessed regularly including a review during physical inventory counts. Inventory is stored in properly secured and environmentally conditioned warehouse locations where access is restricted to authorized personnel. Rejected raw materials are adequately segregated from other raw materials and regularly monitored to ensure timely return to suppliers. Inventory aging reports are prepared and analyzed regularly. Management monitors the adequacy and appropriateness of inventory levels. Rejected finished goods are adequately segregated from other finished goods and are monitored to ensure timely disposition. System functionality monitors and maintains inventory levels in accordance with organization policies.
Obsolete, excess, and damaged inventories are adequately segregated from other finished goods inventories and are monitored to ensure appropriate and timely disposition.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory is adequately safeguarded.
Inventory is stored in properly secured and environmentally conditioned warehouse locations where access is restricted to authorized personnel. Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note). Goods are delivered only to designated, physically secure locations within a warehouse or storage building and are accepted only by authorized personnel.
Adjustments to inventory prices or quantities relate to valid price changes and physical inventory differences.
Management reviews and approves all recorded adjustments to inventory prices or quantities. All inventory adjustments are compared to authorized source documents to ensure that they were accurately input. Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Inventory adjustment forms are sequentially pre-numbered; the sequence of such forms is accounted for.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
All adjustments to inventory prices or quantities are recorded.
Management reviews and approves all recorded adjustments to inventory prices or quantities. Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Inventory adjustment forms are sequentially pre-numbered; the sequence of such forms is accounted for.
Adjustments to inventory prices or quantities are recorded timely and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and the inventory records are reconciled to general ledger. Management reviews and approves all recorded adjustments to inventory prices or quantities. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. If a nil pick or short pick occurs, or if the inventory system shows that a storage location is empty, an inventory count request is automatically generated and followed up.
Adjustments to inventory prices or quantities are recorded accurately.
Management reviews and approves all recorded adjustments to inventory prices or quantities. All inventory adjustments are compared to authorized source documents to ensure that they were accurately input. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Inventory adjustment data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
RECEIVING AND STORING RAW MATERIALS
Raw materials are received and accepted only if they have valid purchase orders.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
When goods received are matched to open purchase orders, receipts with no purchase order or that exceed the purchase order quantity by more than an established amount are rejected.
Raw materials received are recorded accurately.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Goods received input data is edited and validated; identified errors are corrected promptly. Purchase requisitioning, purchasing, inventory management, and accounts payable functions are performed by an integrated application system. The general ledger is automatically updated for receipt and disbursement transactions.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
All raw materials received are recorded.
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for.
Supplier statements are reconciled to goods receipt records regularly.
Invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific management approval. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Receipts of raw materials are recorded timely and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
YES
NO
N/A
Goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are canceled once matched or on payment of the invoice to prevent reuse.
Management reviews recorded purchases (receipts of goods) based on its knowledge of day-to-day activity. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period.
Supplier invoices and credit notes received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific management approval.
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Purchase requisitioning, purchasing, inventory management, and accounts payable functions are performed by an integrated application system. The general ledger is automatically updated for receipt and disbursement transactions.
ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Defective raw materials are returned timely to suppliers.
Rejected raw materials are adequately segregated from other raw materials and regularly monitored to ensure timely return to suppliers. Defective raw materials received from suppliers are logged; the log is monitored to ensure that the defective goods are returned promptly and that credit is received timely.
REQUISITIONING MATERIALS
All transfers of raw materials to production are recorded accurately and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g.production, finished goods storage) and are recorded in the appropriate period.
Raw materials received by production are logged; the log is reconciled to raw material movement reports that are used to record movements of inventory in the financial records. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system.
PRODUCING/ COSTING INVENTORY
All recorded production costs are consistent with actual direct and indirect expenses associated with production.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All direct and indirect expenses associated with production are recorded as production costs.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All direct and indirect expenses associated with production are recorded accurately and in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
When standard costing is used, management approves the standard costs and reviews variances between actual and standard costs. Significant variances are investigated and adjustments to inventory and cost of sales are approved by management. When actual costing is used, costs associated with raw materials, labor, and overhead are independently reconciled to appropriate supporting records. When actual costing is used, management reviews actual costs based on their knowledge of day-to-day activities. Production reports input data is edited and validated; identified errors are corrected promptly.
All transfers of completed units of production to finished goods inventory are recorded completely and accurately in the appropriate period.
Finished goods sent to the warehouse are logged; the log is used to ensure that all finished goods are recorded in the inventory records.
All defective products and scrap resulting from the production process are valid and recorded completely and accurately in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Rejected work in progress is adequately segregated from other work in progress and is monitored to ensure it is scrapped or reworked on a timely basis. Management, based on their knowledge of day-to-day activities, reviews records of scrapped and reworked items and checks whether such items have been correctly identified and properly recorded in the appropriate accounting period.
HANDLING FINISHED PRODUCTS
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g., production, finished goods storage) and are recorded in the appropriate period.
Goods received input data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Finished goods received from production are recorded completely and accurately in the appropriate period.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods received are logged; the log is reconciled to receipts input to the inventory management system that is used to record movements of inventory in the financial records.
Goods received at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate period.
Inventories received, including transfers, are counted and compared to receipt or transfer documentation that is used to record movements of inventory in the financial records by personnel in the area assuming responsibility for the inventory (e.g. production, finished goods storage) and are recorded in the appropriate period.
Goods receipt vouchers (proof-of-delivery documentation) are prenumbered; the sequence of such vouchers is accounted for. Goods received are batched and batch input data is balanced; out-of-balance batches are corrected promptly.
Goods received input data is edited and validated; identified errors are corrected promptly.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Goods received from production or returned by customers are only accepted in accordance with the organization’s policies.
Quality control inspections are performed for finished goods returned by customers and/or received from production to assess whether such goods should be returned to inventory, reworked, or scrapped.
SHIPING FINISHED PRODUCTS
All shipments are recorded.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Management reviews relevant sales, accounts receivable, costs of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions.
Delivery notes are sequentially numbered; the sequence of delivery notes processed is accounted for.
Orders are sequentially numbered. The sequence of orders processed is accounted for. Shipments of goods to customers are logged. The log is used to ensure that all shipments are invoiced and that all invoices are recorded. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note).
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Shipments are recorded accurately.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Physical inventory is counted periodically by persons independent of day-to-day custody and recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon. Data input to the invoicing subsystem is compared to priced order and shipment data per the separate, nonintegrated order entry and/or shipping applications; differences require management approval before invoices can be processed. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions. Bar code scanners are used to input actual inventory picking and storage locations and quantities; differences from picking and storage instructions are investigated. Shipping transaction input data is edited and validated; identified errors are corrected promptly. Data transferred from the order entry subsystem to the shipping and invoicing subsystems is balanced; identified errors are corrected promptly. Shipment data and/or backorders are input in batches. Batches are balanced and out-of-balance batches are corrected timely.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Shipments are recorded timely and in the appropriate period.
Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger. Goods shipped at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate accounting period, including the raising and recording of the related invoice. Inventory quantities per the inventory management system are regularly reconciled to quantities per the nonintegrated warehouse system. Sales order entry, shipping, and invoice processing are performed by an integrated application system. The general ledger is automatically updated for shipping and invoicing transactions.
Inventory is relieved only when goods are shipped with approved customer orders.
Before goods are shipped, the details of the approved order are compared to actual goods prepared for shipment by an individual independent of the order picking process.
Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g.delivery note or goods returned note). Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Costs of shipped inventory are transferred from inventory to cost of sales.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Costs of shipped inventory are recorded accurately.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Amounts posted to cost of sales represent those associated with shipped inventory.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
Costs of shipped inventory are transferred from inventory to cost of sales timely and in the appropriate period.
Management reviews relevant sales, accounts receivable, cost of sales, and inventory reports related to order entry, shipping, invoicing, and accounts receivable; significant unusual relationships are monitored and acted upon.
MAINTAINING INVENTORY MASTER FILE
Only valid changes are made to the inventory management master file.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Recorded changes to inventory master file data are compared to authorized source documents to ensure that they were input accurately. List prices of composed products are automatically calculated based on the list prices of components of such products. Significant changes to the inventory master file are approved by management.
All valid changes to the inventory management master file are input and processed.
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Requests to change inventory master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. Requests to change inventory master file data are submitted on prenumbered forms; the numerical sequence of such forms is accounted for to ensure that all requested changes are processed timely. List prices of composed products are automatically calculated based on the list prices of components of such products.
Changes to the inventory management master file are accurate.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. Requests to change inventory master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. Requests to change inventory master file data are submitted on prenumbered forms; the numerical sequence of such forms is accounted for to ensure that all requested changes are processed timely. List prices of composed products are automatically calculated based on the list prices of components of such products.
Inventory management master file remains pertinent.
Inventory master file data is periodically reviewed by management for accuracy and ongoing pertinence. The salability of finished goods and usability of raw materials are assessed regularly, including a review during physical inventory counts.
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ABC & CO. Inventory Management Internal Control Checklist CONTROL ACTIVITIES
Prepared By: ___________ Date: ___________
YES
NO
N/A
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