Receipt of Material & Quality Checks
- Review of the gate entry for the incoming material in the inward gate register.
- Ensure that the weighment / Counting of the incoming material is made properly and correctly at the receiving section.
- Verify that stamp / acknowledgement of the receipt of the incoming material. The remark should indicate the quantity (weight / number of pieces etc.) of the material recorded at the gate along with condition (ok / damaged / wet etc.) in which material has been received.
- Review of Goods Receipt Note (GRN) prepared at the time receipt of goods.
- Verify the flow of transaction in the ERP/ SAP system.
- Ensure that the procedure for quality testing of raw material / finished goods is well documented in the form of a quality manual
- Ensure and check that the raw material / finished goods once rejected are not subsequently cleared under deviation. In special cases ensure that the approval under the deviation is duly approved.
- Review of time period within which, rejected material is intimated to the stores and subsequently to the vendor.
- Verify the treatment of rejected material recorded in the books.
Issue of Material from Stores
- Review the process related to issuance of materials from stores and transactions recorded in the ERP/ SAP.
- Verify the indents raised during the period under review.
- Verify that whether the indent raised and material issued is as per the order received.
- Verify whether the expiry details for all the material has been recorded in the system.
- Verify the controls related to issue of material on whether on FIFO basis or any other basis and control for the expired material being issued to production.
Physical Verification of Inventory
- Verify the last physical verification being conducted and analysis the discrepancies and its treatment, if any have been recorded in the books.
- Verify whether any calendar is being maintained for physical verification; if yes, whether physical verification is being done
- On random basis, physical verification of inventory to be conducted. Random sampling to be done factoring the following:
i) ABC analysis of materials,
ii) Categorization of materials into Raw Material, Consumables, Spare parts, BOC and finished goods,
iii) Value of materials under various category.
- Highlight the discrepancies; if any between Actual Inventory vis-à-vis Inventory as per ERP/ SAP
- Highlight the discrepancies; if any between the actual inventories physically verified vis-à-vis Minimum/ Maximum levels defined for each inventory
- During the physical verification, analyze the change in location of inventory, condition of inventory, Non-tagged inventory and inventory physically available but not recorded in the system.
Material sent to third party
- Verify whether the material sent to third party is either on Returnable Gate Pass (RGP) or Non-Returnable Gate Pass (NRGP)
- Review the ageing analysis of material sent on RGP and analysis the reason for RGP beyond 180 days
- Verify the Reconciliation and Balance Confirmation with Third Party
- Confirm whether any surprise visit exercise is conducted by the unit to third party location, to verify the material at the third party
- Verify that non-returnable material have been issued only on NRGP
- Verify the Slow Moving, Non-Moving inventory and compare the same with the company’s policy and highlight instances of deviation from the company’s policy
- Verify the Obsolete inventory and compare the same with the company’s policy and highlight instances of deviation from the company’s policy
- Verify whether the inventory have been issued on FIFO basis or not. Compare the GRN date vis-à-vis the issue date for the respective material.
- Ensure that the expired material have not been issued for production
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
CA Aman Aggarwal
AKGVG & Associates