s ox inventory management risks and controls
TRANSCRIPT
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Unit:
Subject: Sarbanes-Oxley Act Review - Inventory Management
Title: Risk & Control Identification
Year end:
OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITIGA
(Internal Aud
MILL RAW MATERIALS
Receiving of Raw MaterialsRaw materials are received and accepted only if
they have valid Purchase Orders. (validity)O,F INV101 Raw materials are received and accepted on invalid
Purchase Orders or without Purchase Orders. The
following may be received and ultimately paid for,
rather than returned or refused: unordered raw
materials, excessive quantities, incorrect items,
cancelled or duplicated deliveries. Raw materials that
arrive too early or too late may be accepted. Company
policy is not followed regarding the handling of receipts
for which no Purchase Order can be located on SAP.
The requirement exists that a goods rec
Purchase or Production Order so there
received were ordered. All goods recei
Purchase Order (PO) number. Purchas
documents and is verified for validity.
Raw materials are checked for quantity and quality
before being accepted.O,F,
C
INV102 Raw materials received are not subject to an inspection
for quality / quantity. Criteria are not clearly established
for inspecting received goods and services. No policy
is established for inspecting receipts in proportion to
their importance and value. Only the vendor's delivery
note (and not the physical goods) is matched to thePurchase Order. Inspection results are not recorded to
be available for the vendor evaluation process.
Vendors do not deliver the expected quantity or
materials. Goods receipt discrepancies are not
addressed. Company policy regarding the handling of
under/over deliveries is not followed. Tolerances for
under/over deliveries are set to inappropriate values.
Raw materials are accepted without authorised
documentation (e.g. COAs - Certificate Of Analysis).
Goods counted and inspected before ac
and unacceptable items are returned to
checked for quantity and quality: Quanti
verified by actual count, weight, or meas
department. Quality inspection evidence
notations, receiving reports, or other acin quantity ordered versus quantity ship
less than those indicated on the Purcha
however, quantities more than those ind
Order should be approved by the requis
buyer.
Returns of raw materials to suppliers are properly
handled.O, F INV103 Damaged or low quality goods received are not
properly identified and handled. Defective raw
materials are not returned to the supplier and are
accepted into stock. Accounts payable is not notified of
goods returned to vendor, and the invoice is paid.
Return deliveries are not entered promptly into the
system in order to reverse the goods receipt updates.
No process is established to ensure the vendor issues
credit memos when appropriate.
Defective raw materials received from s
is monitored to ensure that the defective
and that the credit (AP) is received time
are adequately segregated from other r
used. Rejected raw materials are regul
timely return to suppliers. A security che
return form or a delivery note is perform
premises.
Only raw materials received are recorded.
(validity)O, F INV104 Fictitious receipts of raw materials may be recorded.
Invalid materials may be recorded. Payments may be
made for fictitious goods.
SAP edits and validates input GRN data
allowed, for example, for a material mas
Upon entry in the field SAP automatical
against the values available in the confi
receipts are created with reference to a
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITI
(Internal A
Raw materials received are recorded accurately.
(accuracy)O, F INV105 Raw materials receipts are not recorded accurately.
Incorrect goods receipt information is entered.
Capturing of receipts directly into SAP
levels, Visual checks by operator, e.g
description appears on the screen, Li
quantities (e.g. no negative amounts)
Goods received note (GRN) data on-
created with reference to a Purchase
information from Purchase Order into
SAP material movement automaticall
quantity) and accounting (for value) d
update these items: Purchase Order h
Requirements Planning (MRP) (plann
accounts.
Raw materials received are allocated correctly.
(classification)O, F INV106 Goods receipts do not have the correct account
assignments.
Account assignment is determined at
authorisation (PR / PO).
All raw materials received are recorded.(completeness)
O, F INV107 All raw materials are not recorded when received.Inventory received is not recorded at all. Goods
movements are not captured on SAP (i.e. receipt of
raw materials).
All deliveries must be directed througstores procedures should be impleme
receipts are recorded. Vendor statem
follow-up of invoices without GRNs.
Receipts of raw materials are recorded timeously
and in the correct period. (proper period)O, F INV108 All raw materials received are not recorded in the
period in which they have been received. Goods
receipts are not entered immediately into the system,
particularly on period-end dates.
Documentation in respect of goods re
end of an accounting period is scrutin
ensure complete and consistent reco
Received raw materials are safeguarded. O, F INV109 Raw materials are received by unauthorised personnel.
Received goods are not physically secured to protect
them from theft. Personnel are not required to
acknowledge receipt of goods.
Goods are delivered only to designate
within a warehouse or storage buildin
authorised personnel (stores personn
Raw materials are delivered to the correct
location.O, F INV110 Raw materials are delivered to the incorrect location. Purchase Order forms are pre-printed
that instruct vendors only to deliver to
accompanies vendors which deliver to
environmentally sensitive material to tExpected and overdue orders for raw materials
are monitored.O, F INV111 No monitoring of expected or overdue goods receipts.
Vendors do not deliver on time. No action is taken for
late deliveries.
Expedition of Purchase Orders is cov
cycle.
See weighbridge for relevant controls and risks over
incoming product.
Transfers (issues) of Raw Materials to ProductionIssues from raw materials inventory are made only
on the basis of authorised documents.
(authorisation)
O, F INV201 Goods movements in SAP (inventory transfers,
transfer postings) are not authorised. Unauthorised
issues may be recorded. Incorrect quantities of raw
materials may be transferred to production. Raw
materials not requested transferred to production.
Appropriate documentation is comple
Written stores requisition is required f
Materials are only transferred on the b
source document. Transfer document
transfers, stores or other activities and
material and quantity received. Reque
approval on stores requisitions as ack
All issues of raw materials to production are
accounted for. (completeness)O, F INV202 Issues from raw materials inventory may not be
recorded. Transfer documents may be lost. Goods
movements are not captured in SAP.
Prenumber transfer documents (e.g. s
The sequence of these documents is
Missing documents should be investig
All material is issued in a timely manner. O INV203 Late raw materials issues may resulting in loss of
production time.
A procedure should be established th
order (transfer, work, etc.) within an e
inventory has been picked. By issuing
immediately after the pick has been c
are kept current and the possibility of
to an order is minimized.
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MIT
(Internal A
Issues from raw materials inventory are correctly
recorded as to quantity and amount. (accuracy).
Issues from raw materials inventory are processedin the correct accounting period to the correct
account. (classification and proper period)
O, F INV204 Transfers (issues) of raw materials to production may
not be accurately recorded. Raw materials issues may
be processed in the incorrect period or to the incorrectaccount. Raw materials may be allocated to the
incorrect cost centre. Transfer procedures do not
require preparation of supporting documentation.
Transfers of raw materials are docum
raw materials to production are only d
document. A procedure should be esdocuments are captured in SAP with
after the inventory has been issued. B
immediately after the issue has been
in SAP are kept current and the poss
Physical inventory is counted periodic
reconciled to inventory records and a
Monthly consumption figures are revi
Variances against standard are ident
All materials requisitioned represent valid items
and quantities used in the production of pulp or
paper at the mill. (validity)
O INV205 Raw materials could be used for unauthorised
purposes. Incorrect raw materials are used.
Validations prevent the entry of incor
nonexistent storage locations or mate
reports for goods issued and goods r
reviewed regularly.
Transfers between units/mills are recorded
accurately and timeously.O, F INV206 Transfers between units/mills are not recorded. Require appropriate documentation o
Raw Materials Stores to other busine
See weighbridge for risks relevant to other mass
measurement devices for issues to production.
Storage of Raw MaterialsCompany personnel store materials in accordance
with established Company Policy.O, C INV301 Raw materials inventory is unusable. Chemicals are
not stored in a dry, safe place and separate from other
raw materials. Other raw materials are not usable due
to bad storage.
Develop strategy/policy for storing ma
and type of storage locations to be us
of materials (3) OSHAct requirement
of hazardous materials (4) Storage ca
inventory requirements. A shelf life st
authorised to include any materials th
timeframe for usage. Physical storag
sources of inventory deterioration.
Raw materials inventory is adequatelysafeguarded. There are special safeguards for
expensive material and material susceptible to
personal use or sale.
O, C INV302 Unauthorised access to raw materials inventory -misappropriation of raw materials inventory.
Storage areas secured against unaustock counts should be regularly perf
against unauthorised admission.
All warehouse and inventory locations comply with
appropriate government, regulatory, and company
policies.
O, C INV303 Non-compliance with statute and / or company policy
e.g. with regard to safety, notices. Fines / Loss of
ratings (e.g. NOSA).
Management reviews all physical inve
compliance with government, regulat
Hazardous materials are stored and handled in an
appropriate manner in accordance with applicable
government regulations.
O, C INV304 Hazardous materials are not stored, handled and
transported in compliance with applicable laws and
regulations. Fines / Loss of ratings (e.g. NOSA).
The item master record should conta
as hazardous. Appropriate procedur
hazardous materials should be maint
follow up on reported safety concerns
maintained which are consistent with
Health Administration and other perti
approved at technical and legal perso
monitored.
Receiving and despatch of raw materials are
separate.O INV305 Receiving and despatch of raw materials take place
out of the same entrance. Lack of segregation of
duties.
Physical storage areas for goods issu
be segregated. Different personal ar
and/or issuing raw materials.
Raw materials inventory adjustments (including
scrapping) are valid. (validity)O, F INV306 Adjustments to raw materials inventory prices or
quantities do not relate to valid price changes and
physical inventory differences. Recorded scrapped
raw materials are not valid.
Detailed records maintained for any a
officials are authorised to make raw m
the basis of an authorised source doc
All raw materials inventory adjustments (including
scrapping) are recorded when identified and are
subsequently accounted for as having been
processed. (completeness)
O, F INV307 All adjustments to raw materials inventory are not
recorded.
Inventory adjustments data is edited
are corrected promptly. Maintain proc
inventory records.
Raw materials adjustments (including scrapping)
are processed to the correct account within the
correct accounting period. (classification and
proper period)
O, F INV308 Raw materials adjustments may be processed in the
incorrect period or to the incorrect account. Raw
materials scrapped items are not processed timeously.
Goods received at, before, or after th
are scrutinised and/or reconciled to e
recording in the appropriate period.
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MIT
(Internal A
Raw materials adjustments (including scrapping)
are accurately processed. (accuracy)
O, F INV309 Adjustments to raw materials may be inaccurately
recorded or incorrectly processed. Raw materialsscrapped items are not processed accurately. Costs of
scrapped items are not written off.
Raw material adjustments are compa
documents to ensure that they were i
Raw materials adjustments (including scrapping)
are reviewed and approved by a responsible
official. (authorisation)
O, F INV310 All adjustments to raw materials inventory have not
been authorised in accordance with the appropriate
limit of authority. The scrapping of raw materials is not
authorised.
The officials are authorised to make r
on the basis of an authorised source
reviews and approves all recorded ad
quantities.
Inventory valuation policy is adhered to when
valuing raw materials stock. Inventory reserves
are reviewed and adjusted to ensure that
balances do not exceed net realisable values.
O,
C, F
INV311 Raw materials inventory does not reflect the existing
business circumstances and economic conditions in
accordance with the accounting policies being used.
(lower of cost or Net Realisable value (NRV))
Raw Materials are valued automatica
average price. At the end of each acc
should assess whether there is any in
impaired. The recoverable amount sh
of stock valuation policy by controlling
monthly basis.
Raw materials are issued on a first in first out
basis.O,F INV312 Raw materials inventory may expire - exceed the shelf
life - or become obsolete.
Materials are issued to production on
monitored and there is regular turnov
limiting the risk of obsolescence.Inventory levels are maintained in accordance with
established Company Policy. Limits are placed on
quantities to be maintained in inventory. The
adequacy and appropriateness of inventory levels
is monitored.
O INV313 Inadequate or inappropriate inventory levels are
maintained. Unanticipated or excess inventory carrying
costs may be incurred.
Management monitors the adequacy
inventory levels. Stock level policies a
replenishment cycles, safety stock lev
and this plan is communicated to app
replenishment policies are periodicall
ensure policies meet changing compa
stock is maintained at the lowest prac
economise the use of working capital
storage.Individual inventory balances per SAP are
periodically compared to the physical inventory of
raw materials. (completeness, accuracy and
validity)
O,F INV314 Inventory balances may be incorrectly recorded.
Correct raw materials stock count procedures are not
followed (e.g. as regards cut-off.) Stock counts of raw
materials are not properly recorded.
Physical inventory is counted periodic
day-to-day custody or recording of inv
reconciled to inventory records and in
to the general ledger.
Adjustments resulting from the comparison of
physical to recorded inventory of raw materials areapproved by a responsible official. (authorisation)
O,F INV315 Raw materials stock count adjustments are not
authorised, or are inaccurate or incomplete. Rawmaterials stock count differences are not investigated
and corrected.
Raw material stock count adjustment
identified errors are corrected promptadjustments are compared to authori
ensure that they were input accurately
Raw materials inventory is usable. Inventory is
periodically reviewed for excess and
obsolescence issues.
O INV316 Obsolete and slow moving raw materials items have
not been identified.
The usability of raw materials is asses
during physical inventory counts. Inve
prepared and analysed regularly.
Replacement items have been ordered (if
required) for raw materials scrapped.O INV317 Replacement items have not been ordered (if required)
for raw materials scrapped.
System functionality monitors and ma
accordance with organisation policies
Scrapped raw materials are kept separate from
other inventory.O INV318 Scrapped raw materials are not kept separate from
other inventory.
Obsolete, excess, and damaged inve
segregated from other finished goods
to ensure appropriate and timely disp
Sufficient inventory of raw materials is kept on
hand. Stock balances are adequate to support the
current rate of consumption, with regard to
economy.
O INV319 Insufficient raw materials inventory levels resulting in
loss of production time or excess inventory or
inaccurate or untimely material requirement forecast.
Management monitors the adequacy
inventory levels or SAP functionality m
inventory levels in accordance with o
Raw Materials Master DataOnly valid changes are made to the raw materials
master data file. (validity)O INV401 Changes to raw materials master data are not valid. A procedure is established that chang
master record are documented on a v
approved by owner of the material ma
entered during raw materials master c
automatically validated by SAP. For e
allowed for base unit of measure, pric
organisation and account group are k
field, the system automatically checks
values available in the configuration t
generated if the value entered is not a
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITIG
(Internal A
Duplicate raw materials master records are
avoided.O INV402 Duplicate raw materials master data may be created.
The same material is defined more than once in the
masterfile but with different names. This may result in
incomplete materials management reporting due to
more than one material number and/or confusion when
selecting material when processing Purchase Orders.
All raw material master entries must be
material master before entry into SAP
unnecessary duplication of materials in
naming conventions are used to reduc
material names. The Material List (RM
and reviewed at least quarterly or as n
This lists materials by number, type, gr
material. Duplicate materials will be inv
material master record if they are not h
BOM, or purchase requisition or Purch
Raw material master data changes are approved
by a responsible official. (authorisation)O INV403 Changes to raw materials master data are not
authorised.
The officials are authorised to enter, m
master data only on the basis of an au
Significant changes to the raw materia
management.
Changes to raw materials master data are
accurate. (accuracy)O INV404 Inaccurate raw materials data may be entered.
Changes to raw materials master data may be
incorrect. For example, a material may be
characterised as an inappropriate material type.
The officials (responsible for maintena
data) shall authorise all requests for m
master data after having checked the c
the data supplied. SAP edits and valid
online. Recorded changes to the mate
compared to authorised source docum
input accurately.
All valid and authorised changes to raw materials
master data are processed. (completeness)O INV405 Not all valid changes to the raw materials master data
are input and processed. Not all materials are included
in the material master.
Requests to change raw material mas
prenumbered forms, the numerical seq
accounted for to ensure that all reques
Raw material master information is recorded in a
consistent and complete fashion to expedite
production and procurement functions. Material
master data information is complete.
O INV406 Incomplete raw material master data may be entered.
Critical fields that must be entered are not specified as
mandatory. Not all materials components (general,
plant, storage location, batch valuation, forecast) are
established.
The field status group defines for a pa
fields are mandatory.
Changes to the raw materials master file are
processed timeously. (proper period)O INV407 Changes to raw materials master data are not
processed timeously.
Requests to change raw material mas
is reviewed to ensure that all request c
timeously.
Raw materials master data remains pertinent. O INV408 Raw material master file data does not remain
pertinent. Material master data no longer needed is
not deleted/archived from the system.
Raw material master file data is period
management for accuracy and ongoin
have not been used for a significant pe
ensure that the material master file rem
All changes to, and deletion, of raw materials
master data records must be properly logged,
documented and retained. The accuracy and
timeliness of changes to the material master
record is reviewed.
O INV409 Changes to raw materials master data are not
supported by valid documentation. Required
documentation is not retained for mandatory retention
periods. Changes to raw materials master data are not
reviewed by a senior member of staff. No responsibility
is assigned for regularly reviewing audit trails of change
information.
Recorded changes to raw materials m
authorised source documents by a sen
that the correct changes were made.
generated using SAP (MM04). A list is
change, old and new values for fields a
the change.
MILL ENGINEERING (STORES ITEMS)
Receiving of Engineering Stores itemsEngineering stores items are received and
accepted only if they have valid Purchase Orders.
(validity)
O,F INV501 Engineering stores items are received and accepted
on invalid Purchase Orders or without Purchase
Orders. Company policy is not followed regarding the
handling of receipts for which no Purchase Order can
be located on SAP.
The requirement exists that a goods re
Purchase or Production Order so there
received were ordered. All goods rece
Purchase Order (PO) number. Purcha
documents and is verified for validity.
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITI
(Internal A
Engineering stores items are inspected before
acceptance.O,F INV502 Engineering stores items received are not subject to an
inspection for quality / quantity. Criteria are not clearly
established for inspecting received goods. No policy is
established for inspecting receipts in proportion to their
importance and value. Only the vendor's delivery note
(and not the physical goods) is matched to the
Purchase Order. Inspection results are not recorded to
be available for the vendor evaluation process.
Vendors do not deliver the expected quantity or
materials. Goods receipt discrepancies are not
addressed. Company policy regarding the handling of
under/over deliveries is not followed. Tolerances for
Goods counted and inspected before
and unacceptable items are returned
checked for quantity and quality: Qua
verified by actual count, weight, or me
department. Quality inspection eviden
notations, receiving reports, or other a
in quantity ordered versus quantity sh
less than those indicated on the Purc
however, quantities more than those
Order should be approved by the requ
buyer.
Returns of engineering stores items to suppliers
are properly handled.O,F INV503 Damaged or low quality goods received are not
properly identified and handled. Defective engineering
stores items are not returned to the supplier and are
accepted into stock. Accounts payable is not notified of
goods returned to vendor, and the invoice is paid.Return deliveries are not entered promptly into the
system in order to reverse the goods receipt updates.
No process is established to ensure the vendor issues
credit memos when appropriate.
Defective engineering stores items re
logged. The log is monitored to ensur
returned promptly and that the credit (
Rejected engineering stores items are
other engineering stores items and retimely return to suppliers. A security c
return form or a delivery note is perfor
premises.
Only engineering stores items received are
recorded. (validity)O,F INV504 Invalid receipts of engineering stores items are
recorded.
SAP edits and validates input GRN da
allowed, for example, for a material m
Upon entry in the field SAP automatic
against the values available in the co
receipts are created with reference to
Engineering stores items received are recorded
accurately. (accuracy)O,F INV505 Engineering stores receipts are not recorded
accurately. Incorrect goods receipt information is
entered.
Capturing of receipts directly into SAP
levels, Visual checks by operator e.g.
description appears on the screen, Li
quantities (e.g. no negative amounts)
GRN data on-line. Most goods receipa Purchase Order. SAP then copies
Order into GRNs per configuration. Th
automatically creates both a material
(for value) document. The transaction
Order history, stock overview, MRP (p
accounts.
Engineering stores items received are allocated
correctly. (classification)O,F INV506 Receipts of engineering stores items do not have the
correct account assignments.
Account assignment is determined at
authorisation (PR / PO).
All engineering stores items received are
recorded. (completeness)O INV507 All engineering stores items are not recorded.
Inventory received is not recorded at all.
All deliveries must be directed throug
stores procedures should be impleme
receipts are recorded. Vendor statem
follow-up of invoices without GRNs.
Receipts of engineering stores items are recorded
timeously and in the correct period. (properperiod) Perpetual inventory records are updated
as of the date the goods are received.
O,F INV508 All engineering stores items received are not recorded
in the period in which they have been received.Goods movements are not captured on SAP (i.e.
receipt of engineering stores items).
Documentation in respect of goods re
end of an accounting period is scrutinensure complete and consistent recor
Received engineering stores items are
safeguarded. Engineering stores items are
delivered to the correct location.
O,F INV509 Raw materials are received by unauthorised personnel.
Received goods are not physically secured to protect
them from theft. Personnel are not required to
acknowledge receipt of goods. Engineering stores
items are delivered to the incorrect location.
Goods are delivered only to designate
within a warehouse or storage building
authorised personnel. Purchase Ord
receiving location and instruct vendor
Expected and overdue orders for engineering
stores items are monitored.O,F INV510 No monitoring of expected or overdue goods receipts.
Vendors do not deliver on time. No action is taken for
late deliveries.
Expedition of purchase orders is cove
cycle.
Engineering Stores items sent for repairs
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITIG
(Internal A
The costs relating to items sent out for repairs are
allocated accurately. (classification)O,F INV601 Costs are not allocated to the correct department or
not allocated accurately. Incorrect costs are allocated
to the works order. Repairs are not allocated to the
correct sub-order or allocated to the incorrect sub-
order.
All costs of repairs allocated should be
accuracy.
Items sent out for repair are repaired timeously. O INV602 Repairs are not done or not done timeously. A maintenance register should be kep
each engineering stores item. The ma
regularly reviewed to identify engineer
The correct repairs are performed on items sent
out for repairs. (accuracy)O INV603 Incorrect repairs are performed. Scope of repairs are
not received from vendors or are incorrect. Repair
history does not accompany item to be repaired and
repairs are not done in terms of valid documentation.
All repairs should be supported by aut
documentation should state what repa
repair history.
Items to be sent out for repair are approved by a
responsible official, to ensure inter alia, that
repairs are correctly allocated internally orexternally. (authorisation)
O,F INV604 Workshop foreman does not inspect repairable item
before repairs are undertaken. Items that could be
repaired internally are sent out for repair at highercosts to the company. Repairs are commissioned /
undertaken without appropriate authorisation.
Only repairs which have been authoris
allocated to the works order. Repairs
specialist to determine whether the repAll repairs should be authorised in term
Items sent out for repair are accounted for and
controlled.O INV605 Items sent for repair are swapped with inferior items
before they are sent back to the mill. Long outstanding
items are not followed up. Vendors do not return
scrapped items to the mill and items are not sent to the
salvage yard at the mill. Items sent for repair are not
returned.
A repairs register should exist. The reg
examined to identify long outstanding
outstanding repairs should be investiga
supporting the item to be repaired sho
make, model and serial number. These
the item on return. All outstanding item
followed up. All scrapped items should
and sent to the salvage yard.
Transfers (issues) of Engineering Stores items to the PlantIssues from engineering stores inventory are
made only on the basis of authorised documents.
(authorisation)
O,FINV701 Unauthorised issues may be recorded. Incorrect
quantities of engineering stores are transferred to the
plants. Engineering stores not requested may be
transferred to production.
Written stores requisition is required fo
Materials are only transferred on the b
source document. Transfer documenta
transfers, stores or other activities and
material and quantity received. Reque
approval on stores requisitions as ackn
All issues of engineering stores to the plants are
accounted for. (completeness)O,F INV702 Issues from engineering stores inventory may not be
recorded. Goods movements are not captured in SAP.
Prenumbered transfer documents (e.g
exist. The sequence of these docume
Missing documents should be investig
Issues from engineering stores inventory are
correctly recorded as to quantity and amount.
(accuracy) Issues from engineering stores
inventory are processed in the correct accounting
period to the correct account. (classification andproper period)
O,F INV703 Transfers of engineering stores to the plant may not be
accurately recorded. Engineering stores issues may be
processed in the incorrect period or to the incorrect
account. Engineering stores may be allocated to the
incorrect cost centre.
Transfers of raw materials are docume
raw materials to production are only do
document. A procedure should be esta
documents are captured in SAP within
after the inventory has been issued. Byimmediately after the issue has been c
in SAP are kept current and the possib
Physical inventory is counted periodica
reconciled to inventory records and a t
Monthly consumption figures are revie
Variances against standard are identif
All engineering stores items requisitioned
represent valid items and quantities used in the
production of pulp or paper at the mill. (validity)
O INV704 Engineering stores items could be used for
unauthorised purposes or personal gain.
Security perform random checks on pe
mill.
Storage of Engineering Stores Items
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MIT
(Internal A
Company personnel store engineering stores
items in accordance with established Company
Policy.
O,C INV801 Engineering stores items are unusable due to bad
storage.
Develop strategy/policy for storing m
and type of storage locations to be us
of materials (3) OSHAct requirement
of dangerous equipment (4) Storage
inventory requirements. Physical stor
for sources of inventory deterioration
All warehouse and inventory locations comply with
appropriate government, regulatory, and company
policies.
O,C INV802 Non-compliance with statute and / or company policy
e.g. with regard to safety, notices.
Management reviews all physical inve
compliance with government, regulat
Engineering stores items are adequately
safeguarded. There are special safeguards for
expensive material and material susceptible to
personal use or sale.
O,C INV803 Unauthorised access to engineering stores items.
Engineering stores items may be stolen, lost,
damaged, or temporarily diverted. Fines / Loss of
ratings (e.g. NOSA).
Access should be restricted to autho
security arrangements (fencing and g
periodic stock counts should be regu
Dangerous equipment is stored handled and
handled in an appropriate manner in accordance
with applicable government regulations.
O,C INV804 Dangerous equipment is not stored handled and
transported in compliance with applicable laws and
regulations. Fines / Loss of ratings (e.g. NOSA).
Appropriate procedures for handling
equipment should be maintained. Th
on reported safety concerns. Relevan
which are consistent with Occupation
Administration and other pertinent law
technical and legal personnel. Comp
Engineering stores inventory adjustments
(including scrapping) are valid. (validity)O,F INV805 Adjustments to engineering stores inventory prices or
quantities do not relate to valid price changes and
physical inventory differences. Recorded scrapped
engineering stores items are not valid.
Detailed records maintained for any a
are authorised to make engineering s
only on the basis of an authorised so
All engineering stores inventory adjustments
(including scrapping) are recorded when identified
and are subsequently accounted for as having
been processed. (completeness)
O,F INV806 All adjustments to engineering stores inventory are not
recorded.
Inventory adjustments data is edited
are corrected promptly. Maintain proc
inventory records.
Engineering stores inventory adjustments
(including scrapping) are processed to the correct
account within the correct accounting period.
(classification and proper period)
O,F INV807 Engineering stores inventory adjustments may be
processed in the incorrect period or to the incorrect
account. Engineering stores scrapped items are not
processed timeously.
Goods received at, before, or after th
are scrutinised and/or reconciled to e
recording in the appropriate period.
Engineering stores inventory adjustments
(including scrapping) are accurately processed.
(accuracy)
O,F INV808 Adjustments to engineering stores inventory may be
inaccurately recorded or incorrectly processed.
Engineering stores scrapped items are not processed
accurately. Costs of scrapped items are not written off.
Engineering stores adjustments are c
documents to ensure that they were
Engineering stores inventory adjustments
(including scrapping) are reviewed and approved
by a responsible official. (authorisation)
O,F INV809 All adjustments to engineering stores inventory have
not been authorised in accordance with the appropriate
limit of authority. The scrapping of raw materials is not
authorised.
Inventory adjustments are compared
documents. Management reviews an
adjustments to inventory prices or qu
Inventory valuation policy is adhered to when
valuing stock of engineering stores items.
Inventory reserves are reviewed and adjusted to
ensure that balances do not exceed net realisable
values.
O,F,
C
INV810 Engineering stores inventory does not reflect the
existing business circumstances and economic
conditions in accordance with the accounting policies
being used.
Engineering stores items are valued
of each accounting period managem
is any indication that inventory may b
amount should be estimated.
Individual inventory balances per SAP areperiodically compared to the physical inventory of
Engineering stores items. (completeness,
accuracy and validity)
O,F INV811 Inventory balances may be incorrectly recorded.Correct engineering stores stock count procedures are
not followed (e.g. as regards cut-off). Stock counts of
engineering stores items are not properly recorded.
Physical inventory is counted periodiday-to-day custody or recording of in
reconciled to inventory records and in
to the general ledger.
Adjustments resulting from the comparison of
physical to recorded inventory of engineering
stores items are approved by a responsible
official. (authorisation)
O,F INV812 Engineering stores stock count adjustments are not
authorised, or are inaccurate or incomplete.
Engineering stores stock count differences are not
investigated and corrected.
Stock count adjustment data is edited
are corrected promptly.
Engineering stores inventory is usable. Inventory
is periodically reviewed for excess and
obsolescence issues.
O INV813 Obsolete and slow moving engineering stores items
have not been identified.
The usability of raw materials is asses
during physical inventory counts. Inve
prepared and analysed regularly.
Scrapped engineering stores items are kept
separate from other inventory.O,F INV814 Scrapped inventory stores items are not kept separate
from other inventory.
Obsolete, excess, and damaged inve
segregated from other stores invento
ensure appropriate and timely dispos
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITI
(Internal A
Sufficient inventory of engineering stores is kept
on hand.O,F INV815 Insufficient inventory levels of engineering stores
resulting in loss of production time or excess inventory
or inaccurate or untimely material requirement forecast.
Obsolete, excess, and damaged inve
segregated from other stores inventor
ensure appropriate and timely dispos
Engineering Stores Master DataOnly valid changes are made to the engineering
stores master data file. (validity)O INV901 Changes to engineering stores master data are not
valid.
A procedure is established that chang
master record are documented on a v
approved by owner of the material ma
entered during engineering stores ma
change is automatically validated by S
that are allowed for base unit of meas
organisation and account group are k
field, the system automatically checks
values available in the configuration ta
generated if the value entered is not a
Duplicate engineering stores material masterrecords are avoided.
O INV902 Duplicate engineering stores master data may becreated. The same material is defined more than once
in the masterfile but with different names. This may
result in incomplete materials management reporting
due to more than one material number and/or
confusion when selecting material when processing
Purchase Orders.
All engineering stores master entries existing material master before entry
unnecessary duplication of materials i
naming conventions are used to redu
material names.
Engineering stores master data changes are
approved by a responsible official. (authorisation)O INV903 Changes to engineering stores master data are not
authorised.
The officials are authorised to enter, m
stores material master data only on th
document. Significant changes to the
approved by management.
Changes to engineering stores raw materials
master data are accurate. (accuracy)O INV904 Inaccurate engineering stores master data may be
entered. For example, a material may be characterised
as an inappropriate material type.
The officials (responsible for maintena
master data) shall authorise all reques
material master data after having che
accuracy of the data supplied. SAP e
master records online. Recorded chadata are compared to authorised sou
they were input accurately.All valid and authorised changes to engineering
stores master data are processed. (completeness)O INV905 Not all valid changes to engineering stores master data
are input and processed. Not all engineering stores
are included in the material master.
Requests to change engineering store
submitted on prenumbered forms, the
forms is accounted for to ensure that
processed.
Engineering stores master information is recorded
in a consistent and complete fashion to expedite
sales, production and procurement functions.
Material master data information is complete.
O INV906 Incomplete material master data may be entered.
Critical fields that must be entered are not specified as
mandatory. Not all material components (general,
plant, storage location, batch valuation, forecast) are
established.
The field status group defines for a pa
fields are mandatory.
Changes to the engineering stores master file are
processed timeously. (proper period)O INV907 Changes to engineering stores master data are not
processed timeously.
Material master file data is periodically
accuracy and ongoing pertinence. Ma
for a significant period of time are revi
material master file remains up-to-dat
Engineering stores master file remains pertinent. O INV908 Engineering stores master file data does not remainpertinent. Engineering stores material master data no
longer needed is not deleted/archived from the system.
Engineering stores management masreviewed by management for accurac
All changes to, and deletion of, engineering stores
master data records must be properly logged,
documented and retained. The accuracy and
timeliness of changes to the material master
record is reviewed.
O INV909 Changes to engineering stores master data are not
supported by valid documentation. Required
documentation is not retained for mandatory retention
periods. Changes to engineering stores master data
are not reviewed by a senior member of staff. No
responsibility is assigned for regularly reviewing audit
trails of change information.
Recorded changes to engineering sto
compared to authorised source docum
staff to ensure that the correct change
PRODUCTION
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITIG
(Internal Au
Production Planning and ControlAll production orders are accounted for as having
been fulfilled. (completeness) Production orders
are created and released on a timely basis to
allow for timely meeting of commitments to
customers.
O INV
1001
Work-in-progress may not be completed timeously,
and as a result commitments to customers may not be
met, or finished goods may be unsaleable.
Production plans and their associated
entered timely in the system which help
lead times are met. There is an establ
procedure that includes the timeliness
Production orders are accurately prepared.
(accuracy)O INV
1002
Incorrect product may be manufactured resulting in
unsaleable finished goods.
Production orders are approved by a responsible
official. (authorisation)O,F INV
1003
The company may produce unacceptable products or
quantities of products in excess of acceptable levels;
this could result in obsolete, excess, or otherwise
unsaleable inventory; it could also result in abnormal
sales returns because of unacceptable product quality.
Only authorised personnel may enter d
release production plans to help ensur
production data. Only authorised pers
process planned production orders to h
production records.
Production operates consistent with management
intent and the approved production plans. Thevarious measurements/criteria reporting are
enabled and are properly approved.
O INV
1004
Production may not be planned in an orderly manner.
Incorrect manufacturing processes may be usedresulting in unsaleable finished goods.
Various reports are available from SAP
reviewed periodically by Production Maensure the proper production control. T
procedures that define the process by
measurements and reporting is determ
Processing and Recording of Production CostsThe use of labour, materials and plant in
production is recorded. All labour, materials, and
overhead recovery bases are accounted for as
having been processed to cost of production.
(completeness)
O,F INV
1101
Production costs may not be accounted for. All direct
and indirect expenses associated with production may
not be recorded as production costs.
Costs associated with raw materials, la
independently reconciled to appropriat
Labour, materials, overhead recovered and other
production measurements are accurately
recorded. (accuracy) To properly account for
productions costs, collected machine costs (run-times, set-up costs, changeover costs,
maintenance costs), labour costs (standard costs,
actual costs, overtime costs) collected/entered are
accurate.
O,F INV
1102
Production costs may be inaccurately recorded. Reconciliations of quantities set forth in
used in production. Costs associated w
overhead are independently reconciled
records. When standard costing is usestandard costs and reviews variances
costs. Significant variances are investi
used, management reviews actual cos
day-to-day activities.
Production costs are recorded against the
appropriate production units in the correct
accounting period. (classification and proper
period)
O,F INV
1103
Production costs may be recorded against incorrect
production units or the incorrect period.
SAP account assignment configuration
materials are posted to the appropriate
Management should review the record
production units to ensure that they ha
and in the correct period.
Labour, materials, and plant are used in
production only if authorised. (authorisation)O,F INV
1104
Unauthorised factors of production may be used and
result in irrecoverable costs. The production
processes and inventory holdings may be sub-optimal
and result in irrecoverable costs.
Only authorised costs should be alloca
Defective Products and ScrapAll defective products, by products and scrap
resulting from the production process are
authorised. (authorisation)
O INV
1201
Scrapped items (broke) are not authorised. Materials
are transferred to scrap without proper authorisation.
All products are inspected before bein
inventory: products not meeting specif
reworked or scrapped. Separate pers
for write-offs. Items identified as scrapp
authorised prior to being written down
All defective products and scrap resulting from the
production process are valid and recorded
completely and accurately in the appropriate
period. (completeness, accuracy, and validity)
O,F INV
1202
Scrapped items (broke) are not valid. Inventory is
intentionally scrapped to facilitate misappropriation.
All scrap items (broke) should be writte
broke is reviewed by the Production D
management team. Abnormal wastage
actual production versus budget are in
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITIG
(Internal Au
The reporting of defective products and scrap is
recorded completely and accurately in the
appropriate period. (completeness, accuracy, and
proper period)
O,F INV
1203
Broke not monitored, not properly reported (production
inefficiencies result in excess waste). Sale of broke not
reported properly. Broke or proceeds from sale of
broke misappropriated.
Management, based on their knowledg
review records of scrapped and rework
such items have been correctly identifie
the appropriate accounting period.
Orders are fulfilled if make is broked. O INV
1204
Due to broking of original make, customer or
replenishment order is not fulfilled.
The customer should be notified of any
order.
Scrapped (broke) and by-product items are kept
separate from other inventory.O INV
1205
Scrapped (broke) items not kept separate from other
inventory. Scrapped (broke) items may be
despatched.
Rejected work in process is adequately
in progress and is monitored to ensure
a timely basis.
Production Master Data (BOMs - Bill of Material)Only valid changes are made to the BOMs.
(validity) Only valid BOMs are created and saved.O,F INV
1301
Changes to BOMs are not valid. Incorrect product
costing.
A procedure is established that change
documented on a valid source docume
management. All information entered d
and/or change is automatically validateChanges to the BOMs are approved by a
responsible official. (authorisation)O,F INV
1302
Changes to BOMs are not authorised. SAP may be configured to process all B
engineering change (with history) proce
and proper approvals.
Changes to the BOMs are accurate. (accuracy)
BOMs and their associated data are created and
saved accurately which helps ensure accurate
inventory valuation and cost of goods sold.
O,F INV
1303
Changes to the BOMs may be incorrect. Bill of
Materials changes are entered incorrectly.
The officials (responsible for maintenan
authorise all requests for changes to th
the contents and the accuracy of the da
validates material master records onlin
BOMs are compared to authorised sou
they were input accurately.
Material master information is recorded in a
consistent and complete fashion. All BOM master
data is complete (including all relevant views for
manufacturing planning and execution) to ensure
material master data integrity.
O,F INV
1304
Incomplete BOMs data may be entered. Critical fields
that must be entered are not specified as mandatory.
SAP is configured with mandatory fields
entry of this information.
All valid and authorised changes to BOMs areprocessed. (completeness)
O,F INV1305
Not all valid changes to the BOMs are input andprocessed.
Requests to change BOM master file dprenumbered forms, the numerical seq
accounted for to ensure that all request
Changes to the BOMs are processed timeously
(proper period) to help ensure the existence of
pertinent master records.
O,F INV
1306
Changes to BOMs are not processed timeously. Requests to change BOM master file d
reviewed to ensure that all request cha
All changes to and deletion of BOMs must be
properly logged, documented and retained.O,F INV
1307
Changes to BOMs are not supported by valid
documentation. Changes to BOMs are not reviewed by
a senior member of staff.
Recorded changes to BOM master file
authorised source documents by a sen
that the correct changes were made.
Paper ConvertersInventory transfers to / from paper converters
("subcontractors") are complete, accurate and
valid to ensure material transaction integrity and
that stock is properly tracked and safeguarded.
O,F INV
1401
Loss of stock sent to converters. Inaccurate reporting
of costs relating to stock sent to converters.
SAP standard functionality requires tha
recorded through a material document
specific movement types, reason for m
locations for material transfers to subco
with edit checks, mandatory fields, and accurate data entry of material movem
are established for the regular review o
Material Report for inappropriate mater
storage locations.
MILL FINISHED GOODS
Receipt of Finished Goods from Production
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITI
(Internal A
Deliveries / shipments are recorded timeously and
in the correct period. Appropriate cut-off
procedures are used to ensure deliveries are
invoiced in the correct period. (proper period)
O,F INV
1713
Goods issue transactions are not created promptly
after the goods are shipped. Goods issue
transactions are posted in the incorrect period.
Shipments may not be recorded in the period they are
shipped. Deliveries may be invoiced in the incorrect
period. No review is performed to ensure that goods
issue has occurred for all shipments.
Goods shipped at, before, or after the
are scrutinised and/or reconciled to en
recording in the appropriate accountin
and recording of the related invoice.
Recorded shipping transactions are valid. (validity) O,F INV
1714
Shipping transactions may be purposefully or
erroneously altered, resulting in incorrect invoicing and
misstated revenues and receivables.
Sales order entry, shipping, and invoic
an integrated application system. The
updated for all valid deliveries.
Controls over manual delivery documents are
adequate (in particular to ensure that all
shipments are recorded).
O,F INV
1715
Manual delivery documents not actioned and recorded
in SAP.
Manual documents should be process
and running. Manual documents shou
information processed on SAP. Policie
for using manual delivery notes.
Appropriate procedures are in place to control
situations when SAP is off-line.O,F INV
1716
Goods not despatched due to system being offline or
down.
Manual documents are in use, and are
Policies and procedures are in place f
Shipments are delivered in a cost-effective
manner. Routes and vehicles are appropriate forthe movement of goods and materials.
O,F INV
1717
Inappropriate vehicles and/or routes may be used
resulting in unnecessary costs to the Company.
Contracts with haulage contractors sp
(regardless of vehicle / route).
Finished Goods - Cost of Sales
Costs of shipped inventory are transferred from
inventory to cost of sales. (completeness)F INV
1801
Recorded Cost of Sales may be incomplete.
(understated)
Maintain procedures for promptly upd
Costs of shipped inventory are recorded
accurately (accuracy) and posted correctly
(classification).
F INV
1802
Recorded Cost of Sales may be inaccurately
calculated.
SAP account assignment configuratio
shipped goods are posted to the appr
account
Amounts posted to Cost of Sales represent those
associated with shipped inventory. (validity)F INV
1803
Cost of Sales transactions may be invalid. Cost of sales is periodically reviewed
and ongoing pertinence.
Costs of shipped inventory are transferred from
inventory to Cost of Sales timeously and in the
appropriate period. (proper period)
F INV
1804
Cost of sales transactions may be recorded in the
incorrect period. Incorrect costing methods may be
used.
Management reviews relevant costs o
related to order entry, shipping, invoic
significant unusual relationships are m
Storage of Finished GoodsReceiving and despatch of finished goods are
separate.O INV
1901
Receiving and despatch take place out of same
entrance.
The warehouse layout will be establis
shipping locations. A separate entran
Security should ensure deliveries and
correct location.
Finished goods inventory adjustments (including
write-offs) are valid. (validity)O,F INV
1902
Adjustments to finished goods inventory prices or
quantities do not relate to valid price changes and
physical inventory differences. Adjustments may be
processed that are not acceptable to management e.g.
saleable inventory may be improperly written off and
scrapped.
Finished goods adjustments are comp
documents to ensure that they were in
reviews and approves all recorded ad
quantities.
All finished goods inventory adjustments (including
write-offs) are recorded when identified and are
subsequently accounted for as having been
processed. (completeness)
O,F INV
1903
All adjustments to finished goods inventory are not
recorded.
Inventory adjustments data is edited a
are corrected promptly. Inventory adju
the sequence of such forms is accoun
Finished goods inventory adjustments (including
write-offs) are processed to the correct account
within the correct accounting period. (classification
and proper period)
O,F INV
1904
Finished goods inventory adjustments may be
processed in the incorrect period or to the incorrect
account. Scrapped (written-off to broke) items may not
be processed timeously.
Goods received at, before, or after the
are scrutinised and/or reconciled to en
recording in the appropriate period.
Finished goods inventory adjustments (including
write-offs) are accurately processed. (accuracy)O,F INV
1905
Adjustments to finished goods inventory may be
inaccurately recorded or incorrectly processed. Write-
offs of finished goods items may not be processed
accurately. Costs of items broked are not written off
correctly.
Finished goods adjustments are comp
documents to ensure that they were in
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MIT
(Internal A
Finished goods inventory adjustments (includingwrite-offs) are reviewed and approved by a
responsible official. (authorisation).
O,F INV1906All adjustments to finished goods inventory have notbeen authorised in accordance with the appropriate
limit of authority. The write-off of finished goods items
to broke may not be authorised. Possible irregularity:
unwarranted reduction of inventory value to facilitate
"bargain" purchases by employees or third parties.
Inventory adjustments are compareddocuments. Management reviews an
adjustments to inventory prices or qu
Inventory valuation policy is adhered to when
valuing finished goods stock. Inventory reserves
are reviewed and adjusted to ensure that
balances do not exceed net realisable values.
Inventory is carried at the lower of cost or market
value.
O,F,
C
INV
1907
Finished goods inventory does not reflect the existing
business circumstances and economic conditions in
accordance with the accounting policies being used.
(Loss not provided for: inventory valued at above
market price). Continued production of items being
sold at a loss.
At the end of each accounting period
whether there is any indication that in
recoverable amount should be estim
valuation policy by controlling when v
Individual inventory balances per SAP are
periodically compared to the physical inventory of
finished goods stock. (completeness, accuracy
and validity). Physical verification of inventory is
conducted regularly and accurately.
O,F INV
1908
Inventory balances may be incorrectly recorded. SAP
inventory records may have overstated quantities on
hand. Book inventory quantities are inaccurate causing
stock outs or excess inventories and misstated
financial statements.
Physical inventory is counted periodic
day-to-day custody or recording of in
reconciled to inventory records and in
to the general ledger.
Correct finished goods stock count procedures
are followed in order to detect any physical loss of
finished goods inventory. (validity) Physical
verification of inventory is appropriately planned.
O INV
1909
Undetected physical loss or deterioration of inventory.
The physical inventory process and timing is not in
accordance with company policy. Instructions for
performing the physical verification are inadequate. No
preliminary warehouse clean-up is performed (reducing
damaged, failed inspection and in-transit inventory).
Goods receipts and issues are not processed prior to
physical verification. Materials are inadvertently
excluded from the verification process. Inventory
documents are mislaid so the count is incomplete.
Appropriate cut-off procedures are not documented,
planned, followed and communicated. Inventory
balances are not "frozen" at the time of the account toensure proper cut off and to prevent artificial
discrepancies or incorrect adjustments being made.
Company owned materials at all locations(e.g.
materials at customers or third party warehouses) are
not physically verified. Non-Company owned material is
counted in the company's own inventory. Possible
irregularity: non-existent items are included in periodic
physical inventory count.
Stock counts should be performed in
policy. Employees who perform the c
guidelines. Procedures should ensur
not inadvertently counted in Compan
count documents are retained after th
audit trail).
Adjustments resulting from the comparison of
physical to recorded inventory of finished goods
stock are completely and accurately recorded, and
are approved by a responsible official.
(authorisation)
O,F INV
1910
Finished goods stock count differences are not
investigated and corrected. Adjustments may be
recorded to conceal physical shortages. Incorrect
inventory differences are recorded. No report of
differences is produced or reviewed by management.
Inventory differences are posted to the incorrect GL
account. Posting of inventory differences is notappropriately authorised.
Finished goods stock count adjustme
identified errors are corrected promp
adjustments are compared to author
ensure that they were input accuratel
Inventory is managed to prevent obsolescence
and excessive write-offs. Obsolete, slow-moving
and/or overstocked inventory is prevented or
promptly detected and provided for.
O INV
1911
Obsolete and slow moving finished goods stock items
have not been identified and are maintained in
inventory. Inventory known to be obsolete or slow-
moving not written-off. Continued production of
finished goods stock that cannot be sold.
Inventory ageing reports are prepare
necessary follow-up action is comple
are performed to assess whether suc
inventory, reworked, or scrapped.
Sufficient inventory of finished goods is kept on
hand.O,F INV
1912
Insufficient finished goods inventory levels resulting in
loss of sales.
System functionality monitors and ma
accordance with organisation policies
Finished goods inventory is protected from
damage.O INV
1913
Handling and storage procedures are inappropriate for
the nature of the products. Finished goods are not
stored in an appropriate environment. (safe and dry)
Physical storage methods are regula
inventory deterioration.
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MIT
(Internal A
Physical loss of finished goods inventory is
prevented.O INV
1914
Unauthorised access to inventory. Finished goods
may be stolen, lost, damaged, or temporarily diverted.
Access should be restricted to author
security arrangements (fencing and g
Periodic stock counts should be regushipping label and bar code contain a
a coding structure in place which ens
traceability of finished product.
Finished Goods Master DataOnly valid changes are made to finished goods
master data. (validity)O INV
2001
Changes to finished goods master data are not valid. A procedure is established that chang
record are documented on a valid so
owner of the material master informat
during material master creation and/o
validated by SAP. For example, the v
unit of measure, pricing group, purch
group are known to SAP. Upon entry
automatically checks the value entere
in the configuration tables. An error mvalue entered is not available.
Duplicate finished goods material master records
are avoided.
INV
2002
The same material is defined more than once in the
masterfile but with different names. This may result in
incomplete materials management reporting due to
more than one material number and/or confusion when
selecting material when processing Sales Orders.
All material master entries must be re
material master before entry into SAP
unnecessary duplication of materials
naming conventions are used to redu
material names.
Changes to finished goods master data are
approved by a responsible official. (authorisation)O INV
2003
Changes to finished goods master data are not
authorised.
The officials are authorised to enter, m
data only on the basis of an authorise
changes to the material master file ar
Changes to finished goods master data are
accurate. (accuracy)O INV
2004
Changes to finished goods master data may be
incorrect. For example, a material may be
characterised as an inappropriate material type.
The officials (responsible for maintena
shall authorise all requests for modific
data after having checked the conten
supplied. SAP edits and validates ma
Recorded changes to the material ma
authorised source documents to ensu
accurately.
All valid and authorised changes to finished goods
master data are processed. (completeness)O INV
2005
Not all valid changes to the finished goods master data
are input and processed. Not all materials are included
in the material master.
Requests to change finished goods m
prenumbered forms, the numerical se
accounted for to ensure that all reque
Material master information is recorded in a
consistent and complete fashion to expedite sales,
production and procurement functions. Material
master data information is complete.
INV
2006
Incomplete material master data may be entered.
Critical fields that must be entered are not specified as
mandatory. Not all materials components (general,
plant, storage location, batch valuation, forecast) are
The field status group defines for a pa
fields are mandatory.
Changes to finished goods master data are
processed timeously. (proper period)
O INV
2007
Changes to finished goods master data are not
processed timeously. Obsolete materials are notdeactivated immediately to prevent sales orders from
referring to them.
Requests to change finished goods m
log is reviewed to ensure that all requtimeously.
Material master data remains pertinent. INV
2008
Material master file data does not remain pertinent.
Material master data no longer needed is not
deleted/archived from the system.
Material master file data is periodicall
accuracy and ongoing pertinence. M
for a significant period of time are rev
material master file remains up-to-dat
All changes to, and deletion of, finished goods
master data records must be properly logged,
documented and retained. The accuracy and
timeliness of changes to the material master
record is reviewed.
O INV
2009
Changes to finished goods master data are not
supported by valid documentation. Required
documentation is not retained for mandatory retention
periods. Changes to finished goods master data are
not reviewed by a senior member of staff. No
responsibility is assigned for regularly reviewing audit
trails of change information.
Recorded changes to finished goods
to authorised source documents by a
ensure that the correct changes were
generated using SAP (MM04).A list is
change, old and new values for fields
the change.
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OBJECTIVE
OBJECTIVE
CATEGORY
RISK
REFERENCE
POTENTIAL RISKSUGGESTED CONTROLS TO MITI
(Internal A
ROAD AND RAIL WEIGHBRIDGES
Details of all commercial vehicles & train "wagons"
are entered into the weighbridge system on when
entering and exiting the mill.
O INV
2101
Details of commercial vehicles & wagons are not
entered into the weighbridge system on entering and
exiting the mill.
Security should ensure that all comme
entering and exiting the mill go via the
Out transaction in the weighbridge sys
should be situated at the entrance/ex
by-pass lane into/out of the mill. If the
should monitor the use of the by-pass
All relevant details of commercial vehicles and
wagons entering /exiting the Mill are recorded.
INV
2102
Relevant details of commercial vehicles and wagons
entering /exiting the Mill are not recorded.
There should be a standard system-g
weighbridge ticket on which all details
registration number, tonnage, time of
truck drivers name, train drivers name
wagons should be recorded.
The incoming and outgoing masses of vehicles
and wagons entering the mill are recorded.
O INV
2103
On entering and exiting the Mill, the mass of the vehicle
& wagons are not checked against the mass of the
invoiced / returned goods. Prescribed weighbridge
tolerance levels are not adhered to.
The mass of the product (Vehicle Out
automatically compared against the m
accompanying the product leaving the
set tolerance will be permitted to exit t
the tolerance should be reported to a
followed up by Security. Reasons ther
weighbridge ticket / OB (Occurrence B
by the investigating parties). Policies a
stipulating the prescribed tolerance le
procedures.The nature of the product being removed per the
accompanying documentation is verified.
O INV
2104
Type of product on vehicle & wagon has not been
verified to the invoiced product.
Security should verify the nature of pr
the description on the accompanying
etc), and should sign the documentat
Unauthorised removal of product or other goods. O INV
2105
Documentation authorising the removal of product
(Delivery notes, route rosters, etc) are used more than
once.
All documentation supporting / author
(delivery notes, weighbridge tickets, e
signed to prevent re-submission.No unauthorised goods leave or enter the mill
without the necessary authorisation and
documentation.
O INV
2106
Undeclared and unauthorised goods may be hidden in
vehicles and not detected.
Security should search trucks & trains
wagon) and all other vehicles on entry
goods, fire arms, cameras etc. Goods
be supported by the authorised releva
Weighbridge system data is valid. O INV
2107
Weighbridge masses and other data can be
overwritten.
The weighbridge system should be se
not be overridden by unauthorised sta
log book to record any "overrides" tha
senior person) to the changes made.
Reliance can be placed on the accuracy of the
mass-measurement devices.
O INV
2108
Weighbridge scale tests are not performed internally
resulting in incorrect mass readings.
Policies and procedures should exist
scale testing (including the way they s
unacceptable variances should be rep
corrected.
Mass-measurement calibrations are done in
conformance with statutory regulations.
O,C INV
2109
Weighbridge not calibrated by independent contractor
on a regular basis resulting in inter alia contravention of
government regulations.
Policies and procedures should exist
calibration intervals and the regulator
to be done every two years).
Adequate controls are in place when the
weighbridge system fails.
O INV
2110
Inadequate control when weighbridge fails. i.e. when
the computer system or weighbridge scale equipment
is down (manual tickets).
During a weighbridge failure, only urg
There should be adequate manual do
the computer or weighbridge system
calculated manually should be checke
correctness before entry or exit. A reg
and maintained to record all "off-line"
Weighbridge movements during system failures
are recorded.
INV
2111
Weighbridge movements during system failures are
not recorded.
All manual transactions should be cap
system as soon as the system is "up &
should agree the information captured
ensure accuracy and completeness o
Security are performing their duties diligently. O INV
2112
Security not performing duties diligently. Senior security officials should monit
they are performing their duties d
personnel should be done as a matte
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