Inventory policy and SKU master
Risk: SKU codes, UOMs, categories, costing attributes or active/inactive status are wrong, duplicated or changed without approval.
Controls
- SKU creation approval
- UOM and category governance
- Duplicate/inactive SKU review
- Costing attribute change log
Tests
- Review new SKU approvals
- Scan duplicate descriptions/UOM mismatch
- Test inactive/reactivated SKUs
- Inspect master-change logs
Evidence
SKU master, item creation tickets, UOM list, category map, approval workflow and change log.
Goods receipt and QC hold
Risk: Goods are recorded without actual receipt, accepted without QC release, or posted to the wrong item/location.
Controls
- Gate-entry to GRN match
- PO tolerance control
- QC hold/release
- Rejected material tracking
Tests
- Match PO, gate entry, GRN, QC and invoice
- Review tolerance overrides
- Trace rejected goods
- Check backdated GRNs
Evidence
PO, gate register, GRN, QC report, rejection note, supplier invoice and stock ledger.
Stock issue and consumption
Risk: Raw material, stores or spares are issued without authorised requisition, production order or usage evidence.
Controls
- Approved material requisition
- BOM/production order linkage
- Stores issue approval
- Excess consumption review
Tests
- Match issues to requisitions/orders
- Compare actual to standard consumption
- Review emergency issues
- Test returns to store
Evidence
Material requisition, issue slip, production order, BOM, batch card, return note and stock ledger.
Transfers and in-transit stock
Risk: Inter-warehouse or branch transfers are lost, delayed, duplicated or not received at destination.
Controls
- Transfer note approval
- Dispatch and receipt confirmation
- In-transit ageing
- Location reconciliation
Tests
- Trace transfer out to receipt in
- Age open transfers
- Review damaged/short receipts
- Reconcile location stock
Evidence
Transfer note, dispatch document, transporter proof, receipt confirmation, in-transit ageing and location stock report.
Physical verification and cycle count
Risk: Book stock differs from physical stock, high-value SKUs are missed, or count variances are adjusted without root cause.
Controls
- Cycle count plan
- Independent count team
- Variance approval
- Root-cause tracking
Tests
- Inspect count plan coverage
- Reconcile count sheets to ERP
- Test variance approvals
- Review repeat variances
Evidence
Count plan, count sheets, variance report, adjustment approval, recount evidence and root-cause log.
Slow-moving, obsolete and NRV review
Risk: Expired, damaged, slow-moving or negative-margin inventory remains at cost without provision or disposal decision.
Controls
- Inventory ageing review
- NRV assessment
- Provision approval
- Disposal action tracker
Tests
- Age no-movement SKUs
- Compare cost to selling price
- Review damaged/expired stock
- Trace provision/disposal approval
Evidence
Ageing report, sales price list, NRV working, damage/expiry report, provision journal and disposal tracker.
Costing and valuation
Risk: Inventory value is misstated due to wrong cost formula, overhead absorption, standard cost update or landed-cost allocation.
Controls
- Costing policy approval
- Standard cost review
- Overhead absorption review
- Landed-cost allocation control
Tests
- Recompute sample SKU cost
- Check cost formula consistency
- Review overhead basis
- Test purchase price variance treatment
Evidence
Inventory policy, cost sheet, standard cost file, overhead absorption working, purchase invoice and valuation report.
Cut-off and period-end movement
Risk: GRNs, invoices, issues, dispatches or adjustments around period end are recorded in the wrong period.
Controls
- GRN/invoice cut-off review
- Dispatch cut-off review
- Frozen stock period
- Post-close adjustment approval
Tests
- Test pre/post close GRNs and dispatches
- Match invoices to receipt dates
- Review post-close movements
- Inspect manual journals
Evidence
GRN register, invoice register, dispatch register, stock ledger, cut-off checklist and journal support.
Write-off, scrap and shrinkage
Risk: Inventory is written off, scrapped, sold or adjusted without approval, recovery tracking or accounting review.
Controls
- Write-off approval matrix
- Scrap sale reconciliation
- Shrinkage investigation
- Insurance/recovery tracking
Tests
- Sample write-offs and scrap sales
- Match scrap to receipts
- Review shrinkage trends
- Check insurance/recovery accounting
Evidence
Write-off note, scrap register, gate pass, sales invoice, receipt proof, shrinkage analysis and approval.
ERP inventory access and adjustments
Risk: Users can create SKUs, post adjustments, backdate movements, override costing or approve their own stock changes.
Controls
- Role-based access
- SoD review
- Adjustment log review
- Leaver and privileged access monitoring
Tests
- Review inventory roles
- Test SoD conflicts
- Scan manual/backdated adjustments
- Match leavers to active users
Evidence
ERP user list, role matrix, adjustment log, audit trail, HR leaver list and access review sign-off.
