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PRODUCTION & INVENTORY CYCLE, i) Production planning and design, ii)…
PRODUCTION & INVENTORY CYCLE
1.FUNCTIONS
2. Documents
Raw materials issue slip (RMI), IJC, CJC, customer production process, Daily production report, Completed production report , Inventory master files etc
3. Control objectives
Completeness, Existence, Validity, Accuracy, Authorisation, Safeguarding of assets, Recording & Cut off
4. Internal controls
• Supervision and review
• Segregation of duties
• Rotation of duties
• Personnel take leave regularly
• Management control
• Internal audit
• Sufficient stationery control
• Scrutinise all records and documents for extraordinary items
• Test castings and calculations on all selected items, documents and ledger
accounts
5. Weaknesses & Risks
Weakness
: The transfer of raw materials to production might not be valid as there is no document (RMI) to prove that the transaction is valid.
Risk
: The organisation will be issuing more (or less) raw materials to production than actually needed, and there could be unauthorised issuing of raw materials that could lead to unauthorised production. This will affect the organisation in a negative financial manner
i) Production planning and design
ii) Production processing
ii) Inventory management