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STANDARDAUDITPROGRAMMEGUIDE

SAPGRef.:

Function:Stock&MaterialsHandling

Activity/System:StockControl

Company:

Division:

Country:

Site:

AuditRef.:

Date:

Completedby:

Reviewedby:

ControlObjective(s):
(a)Toensurethatadequateandappropriatestocksareheldtomeetthedemandsofsalesandproduction;(b)Toavoidoverstocking;(c)Toensurethatallstock
movementsarevalid,authorised,correctlyprocessed,accountedfor,andaccuratelyreflectedintheaccounts;(d)Toensurestocksaresecurelyandappropriately
storedinorderpreventloss,theft,deteriorationormisappropriationofstockitems;(e)Toensurethatstockrecordsareaccuratelymaintained,adequately
protectedfromunauthorisedaccess,andregularlyverified;(f)Toensurethatstockdiscrepanciesarepromptlyhighlighted,investigatedandresolved;(g)To
ensurethatstockwriteoffs,scrapandotherdisposalsarejustified,authorisedandcorrectlyhandled;(h)Toensurethatstocklevelsaremonitoredinorderto
detectandreacttoreplenishmentrequirements,obsoleteandslowmovingitems;(i)Toensurethatallstockholdingsaretraceabletoaknownstoragelocation;
(j)Toensurethatmanagementareprovidedwithaccurateandtimelyinformationonstocklevelsandusage;and(k)Toensurethatliaisonbetweenthestock
controlfunctionandotherrelevantactivities(i.e.salesandproduction)issufficienttoenabletheachievementoftheorganisation'sobjectives.

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Risk/ControlIssue

CurrentControl/Measure

WP
Ref.

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

KeyIssues

1.1

Haveauthorisedand
documentedstockcontrol
policiesandprocedures
beenimplemented,andhow
canmanagementbesure
thattheyarefullycomplied
with?

1.2

Howdoesmanagement
determinethecurrentand
futurestockrequirements,
andhowcantheybesure
thatactualstocklevelscan
accuratelymeetsalesand
productiondemands?

1.3

Aremanagementmade
awareofeither
overstockingorstock
shortages,andhoware
theirreactionsevidenced?

1.4

Whatmeasuresensurethat
allstockmovementsare
valid,authorised,correctly
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WP
Ref.

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

processed,andaccounted
for?
1.5

Whatmechanismsprevent
theacceptanceand
processingofinvalidor
unauthorisedstock
movements?

1.6

Howcanmanagementbe
assuredthatstockis
securelystored?

1.7

Whatprocessesensurethat
stockvaluationsare
accurateandcorrectly
reflectedintheinventory
andaccountingrecords?

1.8

Whatmechanismsprevent
themanipulation,distortion
orfalsifyingofstock
records?

1.9

Howcanmanagementbe
certainthatallstock
adjustments,writeoffs,and
scrapdisposalsarejustified,
authorisedandcorrectly
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Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

processed?
1.10

Howwouldmanagementbe
madepromptlyawareof
slowmovingandpotentially
obsoletestockitems?

DetailedIssues

2.1

Areprocessesinplacewhich
ensurethatadequate
informationisprovidedto
facilitateadequatestock
planningtoachievebusiness
objectives?

2.2

Havesuitablytrainedand
experiencedstockcontrol
staffandmanagementbeen
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CurrentControl/Measure

WP
Ref.

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

provided?
2.3

Whatpreventsthe
overstockingofitems?

2.4

Howarestocksmaintainedat
theoptimumlevel,takinginto
accountsuchfactorsas
supplierorproductionlead
time,etc.?

2.5

Arerawmaterials,itemsin
productionandfinished
goodsdiscretelyidentified,
physicallytracked,and
correctlyreflectedinthe
accounts?

2.6

Aremanagementpromptly
alertedtolowstocklevels,
andhowistheirreaction
evidencedandmonitored?

2.7

Areallstockmovementsand
adjustmentssupportedby
documentationandtrailed?

2.8

Arealldamageditemsand
thosereturnedfrom
customers,etc.accurately
identifiedandappropriately
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Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

returnedforcredit?
2.9

Isitpossibletoverifythe
validityofstocksalesthrough
totheaccountsreceivable
system?

2.10

Isitpossibletoverifyall
stockmovementstothe
productionfacilityandagree
stockinputstotheoutputof
finishedgoods?

2.11

Arestockissuesofraw
materialspromptlyactioned
andtheassociateditems
movedintotheproduction
areatominimiseworkflow
disruptions?

2.12

Howcanmanagementbe
certainthatallstockissues
areauthorisedandaccounted
for?

2.13

Whatprocessesensurethat
stockitemsareusedin
rotationsothatitemsdonot
deteriorate?

2.14

Howcanmanagementbe
assuredthatallstock
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WP
Ref.

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

deliveries(includingthose
madedirectlytoproduction
orsaleslocations)are
identified,confirmedas
correct,anddulyaccounted
for?
2.15

Howcanmanagementbe
certainthattheappropriate
accountingtreatmentis
appliedtostockitems(i.e.
fixedorcurrentassets,write
offtorevenue,appropriate
timing,etc.)?

2.16

Whatmeasurespreventthe
theftormisappropriationof
stockitems?

2.17

Whereappropriate,areall
situationswherestockis
eitherstolenordamaged
reportedtothepolice,and
claimedagainsttheinsurers?

2.18

Howcanmanagementbesure
thatallstockmovementsare
accuratelyreflectedonthe
stockcontrol/inventory
records?

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2.19

Arestockrecordsadequately
protectedfromunauthorised
orfalseentries?

2.20

Arethestockrecordssubject
toregularverification,ifso,
howoftenandhowisthis
evidenced?

2.21

Howcanmanagementbe
assuredthatallstockitems
aresubjecttoreliable
verificationandthatthe
valuationscontainedinthe
publishedaccountsare
completeandaccurate?

2.22

Howcanmanagementbesure
thatthepricesusedto
evaluatestockholdingsare
valid,accurateandupto
date?

2.23

Whatmechanismsensurethat
allstocktakingvariancesare
accuratelyrecorded,reported
tomanagement,investigated
andresolved?

2.24

Isadequateauthorisation
appliedandevidencedin
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WP
Ref.

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Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

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CurrentControl/Measure

WP
Ref.

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

supportofallstocktaking
adjustments?
2.25

Areadequateandsecure
stockstoragefacilities
providedinordertoprevent
deteriorationofitemsand
lossesduetotheft?

2.26

Cantheprecisestorage
locationsofallstockitemsbe
promptlydetermined?

2.27

Arestockwriteoffs,
disposals,etc.authorisedat
theappropriatelevelandhow
isthisevidenced?

2.28

Whatmeasuresensurethat
thebestpriceisobtainedfor
stockdisposals(i.e.forscrap)
andaresuchtransactions
authorisedandtherelevant
proceedsconfirmed?

2.29

Howisaccuracyofalldata
inputfromothersystems(i.e.
purchasing)confirmed?

2.30

Howistheaccuracyofdata
outputtoothersystems(i.e.
productcosting,accounts
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Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

receivable,etc)confirmed?
2.31

Howistheaccuracyand
integrityofthestocksystem
recordsassured,andwhat
measuresprevent
unauthorisedaccesstothe
stockdata?

2.32

Howcanmanagementbe
assuredthatmanagement
informationextractedfrom
thestocksystemisaccurate,
timelyandcomplete?

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WP
Ref.

Filename312828767.doc

Effective
Yes/No

Compliance
Testing

Substantive
Testing

Weakness
toReport

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STANDARDAUDITPROGRAMMEGUIDE
SYSTEMINTERFACESFORSTOCKCONTROL
Itisunlikelythatanyactivityorsystemwilloperateincompleteisolation,butwillneedtointeractwithotherdataandsystemsinordertobefullyeffective.
Atasimplelevel,suchinteractioncouldrelatetotheinputofdatafromasourcesystemandthegenerationofamendedorenhanceddatawhichcanbeoutputto
thenextprocess.Forexample,takingcodedtransactionsfromanaccountspayablesystemintothegeneralledgerasthebasisforsubsequentlyproducing
managementaccountsinformation.
Itisoftenatthepointofinteractionbetweensystemswherecontrolsarecritical. Auditorsshouldbesatisfiedthatthedatamovingbetweensystemsis
consistent,completeandaccurate,inorderthatthesubsequentprocessesareundertakenuponareliablebasis.
Thefollowingtableaimstoplot,forthesubjectsystemofthisStandardAuditProgrammeGuide,thepotentialinterfaceswithothersystemswhichmayrequire
auditattention.Indicatorsareprovidedtodifferentiatebetweenthoseinterfaceswhichactasinputsourcestothesubjectsystemandthosewhicharepotential
outputtargets.The"SAPGRef."columnrecordsthereferencenumberoftheProgrammeGuidewhichaddressestheissuesfortherelatedsystem

System

SAPG
Ref.

Input
Source

Output
Target

System

SAPG
Ref.

Input
Source

Output
Target

Warehousing&Storage

0502

Distribution/Transport/logistics

0503

Planning

0104

Insurance

0110

AccountsPayable

0203

Planning&Productioncontrol

0601

AccountsReceivable

0204

Materials&Energy

0604

GeneralLedger/ManagementA/Cs

0205

QualityControl

0605

FixedAssets

0206

SalesDistribution

0707

Inventories

0211

Agents(Sales)

0709

Product/ProjectAccounting

0212

OrderProcessing(Sales)

0710

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FinancialInformation&Reporting

0214

Purchasing

0401

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SparePartsandSupply

0803

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