Inventory

Management
art of making in-demand products available when
customers want them while keeping inventory costs
low.
Inventory Management
The Fraud
Connection
AICPA Practice Alert No. 94-2 lists types of inventory fraud
• Counting as inventory items that should not be included because
they are obsolete, non-existent, not as purported to be or not
owned as salable or usable.
• Double counting or increasing counts on items moving between
locations and counting it at two locations.
• Manipulating reconciliations or programming the computer to
produce false inventory information.
Inventory Process
Control Goals
Effectiveness of operations
• Maintain sufficient inventory to prevent stock-outs
• Maintain sufficient inventory to minimize operational inefficiencies
• Minimize cost of carrying inventory
• Perpetual inventory records (know what inventory levels exist)
• JIT materials acquisition (no overstocks)
• Internal transfer procedures
Efficient employment of resources
• JIT materials acquisition
• Warehouse bin location
Resource security
• Periodic physical inventory counts
• Locked storerooms