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The Production & Inventory Cycle - Coggle Diagram
The Production & Inventory Cycle
Functions
Production planning and design
Production processing
Inventory Management
Documents
Customer Production Order
Inventory Production Order
Raw Material Slip
Customer Job Card/ Inventory Job Card
Job transfer/ inventory movement sheet
Inventory Master Files (Raw materials, WIP and Finished goods)
Daily Production Report
Completed Production Report
Transfer to Finished Goods Note
Picking slip and Delivery notes
Inventory Count Sheet
Inventory Adjustment Form
Control Objectives
Completeness
Existence
Validity
Authorization
Accuracy
Internal Controls
Inventory should be kept in a locked storeroom
Inventory must be appropriately safeguarded against the elements
Inventory must be sufficiently insured
Issue notes must be made out for issuing raw materials to production
No changes allowed on issuing notes
No inventory may leave the storeroom without a delivery note
Continuous inventory records must be maintained and accurately recorded with the appropriate supporting documentation
Regular inventory counts must be done, with comparisons made to inventory records (follow up differences and only make adjustments with management authorization
Obsolete/ slow-moving inventory must be identified timeously and systematically written off according to company policy
Possible weaknesses and risks
Explanation
Weakness
When an organization has weak internal controls
Risk
The potential resulting negative impact of the weak internal controls
Examples
Weakness
Inventory is uninsured to save on costs
Inventory is stored in an unlocked premises
Risk
If inventory is stolen or damaged, the organization may not be able to replace it with its resources at the time
Inventory can easily be stolen