7.

Stock
Purchases
7.1 Material stock purchases are put out to tender before supplier selection
in accordance with Group Procurement Guidelines.
Testing
1. Record the vale of stock in the GL (is this material?).
2. Enquire whether any material stock purchases have been made in the previ
ous 12 months. If yes investigate whether a tender process was used in line wit
h Group Procurement Guidelines.
Results
Recording and Accounting
7.2

7.3
7.4

7.5 On receipt, stocks are promptly recorded on Goods Received Notes and in
a stock book.
Updates to the register are authorised and checked.
Stock records are regularly reconciled to the accounting records, including the
General Ledger.
Stocks are accounted for in accordance with GAAP and Group policy.
Testing
Record the stock management process on file. Include:
1. the receipting of stock;
2. updating the stock records;
3. stock take procedures and frequency (including WIP and stock held at thi
rd party sites);
4. the documentation and reporting of stock take results;
5. the treatment of missing, obsolete and slow moving stock
6. verification of actual stock against accounting records; and
7. the adjustment of accounting records for discrepancies.
Evaluate whether these are sufficient to comply with Minimum Standards.
Evaluate whether the recognition of stock in the accounting records is compliant
with GAAP and Group policy.
Choose a sample of 5 items from the stock records and perform a physical count t
o verify the actual number held.
Reverse the test by counting 5 items in the stock room and checking these to sto
ck records.
Record the results.
Results
Physical Verification and Reconciliation
7.6

7.7
7.8 Stocks are physically verified on a regular basis and agreed to stock re
cords and General Ledger. The results are documented.
Stocks at third party sites are verified.
WIP and Consumables are regularly verified and reconciled.
Testing
Covered above in testing for 7.2 â 7.5.
Valuation
7.9 Revisions to valuations (eg due to obsolescence, revaluations and write
offs) are properly authorised.
Testing
Covered above in testing for 7.2 â 7.5.
Security and Storage
7.10
7.11 Stocks are stored safely and tidily on appropriate racking etc
Stocks are safeguarded from waste, fraud, loss, unauthorised use and misappropri
ation by human action or natural occurrences.
Testing
Visit the stock room to ascertain the appropriateness of stock physical security
and storage. Record the adequacy of these.
Results