Sample Inventory 2296
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I work for a company that does cycle counts/ random sampling of our inventory. I do agree that an outside individual should take the count,
and report the findings, but I am the manager of the stockroom and any transactions in my records should be made by myself or stockroom personnel.
In other words someone else is making transactions in an inventory that
I am responsible for. Please help…
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Who is taking the counts?
Who is making adjustments to your records? The individual taking the counts?
Can you provide more information as to your concerns?
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An individual from another dept. is taking the count, and they tell me that
same person is supposed to make the adjustments as needed.
Does that help?
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If I were in your position, I would like to have any count variances reviewed with me prior to having adjustments recorded. That way, I would have a chance to challenge/explain the variances prior to having them recorded. I would also then have the support for the adjustments being recorded so that I could verify that the adjustments were properly recorded. Don’t get too concerned about having someone else record an entry to the inventory system that you are responsible for unless they cannot or do not provide you with support for the entries.
From an internal control perspective, how are they getting access to your system to record an adjustment? A very common SOX control is access to financial records such that only authorized individuals can record and/or approve adjustments. In order for them to record the adjustment, they must be given access. If this access has not been properly authorized, then you need to speak with your information security team about who can approve giving access to someone outside of your department. That authorization should be very limited.
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Agree with what kymike said.
Additionally, if you go back to basics on inventory there are two concerns - quantity and valuation. Excluding valuation, the principle control you would expect to see on inventory quantity is a book-to-physical confirmation through physical inventory count. It is good practice for this to be independent and this often happens on a cyclical basis in many companies.
From here, you would expect to see a transparent process for book-physical variances i.e. variances over a certain tolerance should be investigated and explained. I don’t believe that it would be good practice for someone to arbitrarily make adjustments without an appropriate discussion/investigation as one shouldn’t dismiss the possibility that the stock counter made an error.
In terms of overall accountabilities I would be expecting someone in the Finance function to be responsible for ensuring that the stock number ties back to the stock ledger and that key controls (such as the stock count) have been performed and that book to physical variances have been investigated, approved and booked.
It sounds to me like it is this last bit that is the problem for you and that perhaps the issue is that the documentation for the adjustments is not transparent and that you are not formally involved in the approval process - based on what you have described you should be.
I would definitely put pressure on the Finance Function to adequately address your concerns and to ensure that you have full visibility over the Inventory that you have responsibility for managing - otherwise you cannot do your job fully and/or properly.
It is admirable that you are concerned about the numbers you are accountable for as it is all to easy for folks to say ‘I don’t have control over this so I won’t worry about it.’