Inventory Controls

Upon successful completion of this course, participants will be able to:

• Recognize the objectives associated with inventory controls.
• Recall the control types that support the different inventory objectives.
• Recognize why inventory controls are important to financial reporting.
• Specify the conditions that can increase inventory risks.
• Recall when expiration controls should be used.
• Recognize the risks associated with unauthorized inventory adjustments.
• Recall the conditions causing higher operational inventory risk.
• Recognize the need for blind receiving.
• Specify the evidence used for inventory receipts.
• Recall who should verify quantities received.
• Recognize the functions that should be separated from inventory custody.
• Recall why warehouse staff should have limited access to some records.
• Recognize the combinations of duties that increase inventory-related risks.
• Specify which controls improve physical counts.
• Recall the documents that support billing.
• Recognize why billing and shipping activities should be separated.
• Recall the functional area that should manage billings.
• Recognize the different types of compensating controls.
• Specify the controls that prevent unauthorized purchases.
• Recall the reason why purchase requisitions are used.
• Recognize the controls used to avoid buying from inappropriate suppliers.
• Recall the controls that cover damaged goods.
• Recognize the controls for the over-shipment of goods.
• Specify why receiving cutoff is so important.
• Recall the controls used to protect high-value goods.
• Recognize why bin location controls are needed.
• Recall the warehouse situations that weaken inventory controls.
• Recognize the main controls for item master records.
• Specify the reasons why units of measure can cause control problems.
• Recall the types of technology that can automatically track inventory.
• Recognize why lot and serial number tracking is useful.
• Recall the nature of perpetual inventory records.
• Recognize the conditions indicated by a negative inventory balance.
• Specify the risks associated with backflushing.
• Recall why inventory records should be reconciled to the general ledger.
• Recognize why bills of material should be tightly controlled.
• Recall the issues that can distort work-in-process inventory levels.
• Recognize the role that scrap reporting plays in monitoring production.
• Specify the different types of inventory transfer controls.
• Recall the risks associated with in-transit inventory.
• Recognize why intercompany transfers need to be controlled.
• Recall the controls that can prevent the unauthorized movement of inventory.
• Recognize the documents that support a shipment release.
• Specify the controls that can reduce picking errors.
• Recall how controls can minimize shipping cutoff errors.
• Recognize the control issues related to customer pickups.
• Recall the controls related to drop shipments.
• Recognize the processing steps for the issuance of a credit memo for returned goods.
• Specify the risks related to warranty and repair returns.
• Recall the main reasons for count planning.
• Recognize how count tags provide control over physical counts.
• Recall the methodology for resolving count variances.
• Recognize the reason for using an ABC inventory classification.
• Specify which inventory classification should be counted most frequently.
• Recall why cycle counters need to be independent.
• Recognize how to use root cause analysis in detecting inventory issues.
• Recall the circumstances under which cycle counts can replace a physical count.
• Recognize the documentation needed to support inventory adjustments.
• Specify why adjustment trends should be closely monitored.
• Recall how an aging report can be used to spot inventory issues.
• Recognize the conditions that require an inventory write-down.
• Specify the controls that can reduce fraud risk.