Professional Documents
Culture Documents
INVENTORIES
1.) Are policies and procedures current, in writing, and properly
approved?
2.) Are these policies and procedures clearly stated and systematically
communicated?
3.) Do these policies and procedures support internal control?
4.) *Are receiving, issuing, accounting and storing responsibilities properly
segregated?
5.) *Has management taken the appropriate steps to safeguard goods
against risk of loss by theft (e.g., goods kept in locked buildings, rooms,
or drawers, access to which is granted only to authorize personnel)?
6.) Are inventory records reconciled (and differences explained) to
Advantage reports on a regular basis? (Current inventory is adjusted at
year-end by fiscal year-end physical counts.)
7.) *Do departments compare quantities received against receiving
reports, etc.?
8.) *Is material released from storerooms only on the basis of requisitions
which are approved by a responsible official of the department?
9.) *Is adequate provision made for obsolete and inactive items in
inventories?
10.) *Does management monitor and approve the write-offs of obsolete
and inactive inventories?
11.) Where details are kept as to value, are they reconciled to general
ledger controls at reasonable intervals (at least annually)?
12.) *Are all classes of inventory items physically counted annually
(triennially if there are perpetual records)?
13.) *Do procedures for physical counts provide for:
a.) Adequate written instructions?
b.) Adequate supervision?
c.) Clearly marking damaged and obsolete inventory?
d.) Use of pre-numbered tags which are accounted for?
e.) The counting of the items and access to the tags only by
employees who are not responsible for custody of the particular
items?
YES NO N/A REMARKS
f.) The rechecking of counts and descriptions (dual counts) where
perpetual records are not maintained and where variations from
the perpetual records are significant?
g.) Careful investigation of significant overages and shortages?
h.) Prompt adjustment of records for inventory discrepancies after
approval by a responsible official other than stores personnel?
i.) Recording counts on permanent inventory count sheets?
j.) The signing and dating of inventory count sheets by the person
supervising the count?
k.) *Does management review the reconciliation of physical inventory
counts to the inventory records?
14.) Are adequate provisions made for cut-off of receipts and issues?
15.) If applicable, are issuing and billing procedures designed and
correlated so as to ensure the billing of all items?
16.) Is there physical segregation and proper accounting control of
merchandise on hand that is not property of the entity?
17.) Is adequate insurance coverage provided?
Questions 18, 19, 20, 21, 22, and 23 apply only to Perpetual Inventory
Systems.
18.) Are detailed perpetual inventory records periodically reviewed for
slow-moving items?
19.) Is a perpetual inventory system (including quantities and value) in use
as to all major classes of inventory?
20.) Are perpetual inventory records updated promptly?
21.) Are the postings to the perpetual inventory records made promptly
from:
a.) Pre-numbered, signed receiving reports?
b.) Issue requisitions?
22.) Are additions to perpetual inventory records referenced to supporting
invoices to insure easy verification of the records?
23.) Are inventories taken without prior reference to quantities on
perpetual records?
24.) *Are discrepancies between physical counts and perpetual records
investigated and resolved?
25.) Does internal control appear adequate for the inventory system
overall?
Other remarks concerning the evaluation of internal control for inventories:
PURCHASING
1.) Is the entity’s purchasing policy in writing and properly approved by the
Management?
2.) When preparing a Purchase Order, do procedures exist to ensure that
the best quality, total price, and delivery is obtained?
3.) Are all purchases made from contracted vendors?
4.) *Are price lists and other appropriate records of price quotations
maintained by the purchasing department?
5.) *Is the purchasing function separate from the accounting and receiving
functions?
6.) *Are purchase orders:
a.) Pre-numbered and controlled?
b.) Prepared only on the basis of purchase requisitions approved by
authorized persons?
c.) Approved by an authorized individual?
7.) Is an adequate record of open purchase orders and agreements
maintained?
8.) *Does management monitor information such as unusual or significant
transactions, disputes with vendors, control overrides, long outstanding
items, etc.?
9.) *Does management review reports on expenditure activity?
RECEIVING
1.) *Are the receiving clerks independent of the purchasing department
and person initiating purchases?
YES NO N/A REMARKS
2.) *Are written receiving reports:
a.) Numerically accounted for or otherwise controlled to ensure that
all receipts are reported to the accounting department?
b.) Prepared for all purchased goods?
c.) Signed and dated?
3.) *Is a copy of the receiving report or other permanent record of material
received kept in the receiving department?
4.) *Are merchandise, materials and supplies inspected for condition and
counted, weighed or measured in the receiving department?
5.) *If copies of purchase orders are furnished to the receiving department,
are quantities omitted in order to ensure an actual count of the
quantities received?
6.) *Are descriptions of supplies, materials, and equipment checked by the
receiving department against a copy of the purchase order or some
other form of notification?
7.) Are procedures in effect that require the person receiving goods of
services to document the receipt by signing the invoice or receiving
report?
8.) *Does management periodically review receiving and purchasing
reports to determine that counts are performed and differences are
reconciled?
9.) Are copies of receiving reports sent directly to purchasing, accounting,
and, if appropriate, inventory recordkeeping?
CASH DISBURSEMENTS
1.) Are all cash disbursements other than petty cash items made by
check/warrant from authorized bank accounts?
2.) Are serially pre-numbered check/warrants used?
3.) *Is the supply of unused checks/warrants adequately safeguarded and
under the custody of persons who do not sign checks/warrants
manually?
4.) *Are checks/warrants prepared only on the strength of properly
approved vouchers (or check requests) by persons who do not approve
the vouchers (or check requests)?
5.) *Are spoiled checks/warrants properly voided to prevent reuse and kept
on file for subsequent inspection?
6.) Is a copy of the check/warrant or a check/warrant register prepared
simultaneously with the preparation of the check?
7.) *Are the supporting data and approvals on the vouchers reviewed by
the check/warrant signers at the time of signature?
8.) *Is notation of payment made on supporting data to prevent duplicate
payment?
9.) *Are checks/warrants mailed by a person independent of the person
who requested, prepared or recorded them?
10.) *Are there limitations on the amounts of single signature
checks/warrants?
YES NO N/A REMARKS
11.) *Is the person writing checks/warrants prohibited from drawing checks
payable to:
a.) Officers or employees (other than for travel, petty cash
reimbursements, etc.) with the understanding that the cash is to be
used for company purposes?
b.) Cash, bearer or similar payee that renders the check payable to
bearer?
12.) Does management review cash disbursement reports and investigate
unusual or significantly large expenditures?
13.) Are checks/warrants outstanding for a considerable time periodically
reviewed for propriety?
* Question was designed to help identify risk factors that could result in errors, fraud, irregularities and/or
illegal acts. When the question is answered “NO”, the risk factor identified should be considered when
analyzing the department’s operations, and the completed questionnaire should be forwarded to
Financial Controls.