{"id":365,"date":"2020-09-05T06:06:27","date_gmt":"2020-09-05T06:06:27","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=365"},"modified":"2020-12-28T09:12:53","modified_gmt":"2020-12-28T09:12:53","slug":"inventory-process-audit","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/inventory-process-audit\/","title":{"rendered":"Inventory Process Audit"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"673\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-1024x673.jpg\" alt=\"\" class=\"wp-image-922\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-1024x673.jpg 1024w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-300x197.jpg 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-768x505.jpg 768w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-1536x1010.jpg 1536w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/12\/Inventory-Process-Audit-2048x1347.jpg 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><strong><u>Receipt of Material &amp; Quality Checks<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Review of the gate entry for the incoming material in the inward gate register.<\/li><li>Ensure that the weighment \/ Counting of the incoming material is made properly and correctly at the receiving section.<\/li><li>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.<\/li><li>Review of Goods Receipt Note (GRN) prepared at the time receipt of goods.<\/li><li>Verify the flow of transaction in the ERP\/ SAP system.<\/li><li>Ensure that the procedure for quality testing of raw material \/ finished goods is well documented in the form of a quality manual<\/li><li>Ensure and check that the raw material \/ finished goods once rejected are not subsequently cleared under deviation.&nbsp; In special cases ensure that the approval under the deviation is duly approved.<\/li><li>Review of time period within which, rejected material is intimated to the stores and subsequently to the vendor.<\/li><li>Verify the treatment of rejected material recorded in the books.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"512\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/10\/inventory-process-audit.jpeg\" alt=\"inventory-process-audit\" class=\"wp-image-377\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/10\/inventory-process-audit.jpeg 1024w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/10\/inventory-process-audit-300x150.jpeg 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2020\/10\/inventory-process-audit-768x384.jpeg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><strong><u>Issue of Material from Stores<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Review the process related to issuance of materials from stores and transactions recorded in the ERP\/ SAP.<\/li><li>Verify the indents raised during the period under review.<\/li><li>Verify that whether the indent raised and material issued is as per the order received.<\/li><li>Verify whether the expiry details for all the material has been recorded in the system.<\/li><li>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.<\/li><\/ul>\n\n\n\n<p><strong><u>Physical Verification of Inventory<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify the last <a href=\"https:\/\/www.akgvg.com\/physical-verification\">physical verification<\/a> being conducted and analysis the discrepancies and its treatment, if any have been recorded in the books.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify whether any calendar is being maintained for physical verification; if yes, whether physical verification is being done<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>On random basis, physical verification of inventory to be conducted. Random sampling to be done factoring the following:<\/li><\/ul>\n\n\n\n<p>i) ABC analysis of materials,<\/p>\n\n\n\n<p>ii) Categorization of materials into Raw Material, Consumables, Spare parts, BOC and finished goods,<\/p>\n\n\n\n<p>iii) Value of materials under various category.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Highlight the discrepancies; if any between Actual Inventory vis-\u00e0-vis Inventory as per ERP\/ SAP<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Highlight the discrepancies; if any between the actual inventories physically verified vis-\u00e0-vis Minimum\/ Maximum levels defined for each inventory<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>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.<\/li><\/ul>\n\n\n\n<p><strong><u>Material sent to third party<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify whether the material sent to third party is either on Returnable Gate Pass (RGP) or Non-Returnable Gate Pass (NRGP)<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Review the ageing analysis of material sent on RGP and analysis the reason for RGP beyond 180 days<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify the Reconciliation and Balance Confirmation with Third Party<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Confirm whether any surprise visit exercise is conducted by the unit to third party location, to verify the material at the third party<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify that non-returnable material have been issued only on NRGP<\/li><\/ul>\n\n\n\n<p><strong><u>Analytical Analysis<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify the Slow Moving, Non-Moving inventory and compare the same with the company\u2019s policy and highlight instances of deviation from the company\u2019s policy<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify the Obsolete inventory and compare the same with the company\u2019s policy and highlight instances of deviation from the company\u2019s policy<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Verify whether the inventory have been issued on FIFO basis or not. Compare the GRN date vis-\u00e0-vis the issue date for the respective material.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Ensure that the expired material have not been issued for production<\/li><\/ul>\n\n\n\n<p><strong>This content is meant for information only and should not be considered as an advice or legal&nbsp; opinion, or otherwise.&nbsp;<\/strong><a href=\"https:\/\/www.akgvg.com\/\"><strong>AKGVG &amp; Associates&nbsp;<\/strong><\/a><strong>does not intend to advertise its services through this.<\/strong><strong><u><\/u><\/strong><\/p>\n\n\n\n<p>Posted by:<\/p>\n\n\n\n<p>CA Aman Aggarwal<\/p>\n\n\n\n<p>AKGVG &amp; Associates<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Receipt of Material &amp; 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&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[207,13,209,208],"class_list":["post-365","post","type-post","status-publish","format-standard","hentry","category-audit-services","tag-audit","tag-audit-services","tag-internal-audit-of-inventory-management-process","tag-inventory-management-process-audit"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=365"}],"version-history":[{"count":3,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/365\/revisions"}],"predecessor-version":[{"id":923,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/365\/revisions\/923"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}