Inventory controls What are some of the important controls that are expected to be included in a well-conceived inventory control system?

Answer 1

A well-conceived inventory control system should ensure the following:

All purchases are authorized.

There is a timely, accurate, and complete recording of inventory transactions.

Receipt of inventory is properly accounted for and independently tested.

Costs are properly identified and assigned to products; variances are analyzed,
investigated and properly allocated to inventory and cost of goods sold.

A perpetual inventory system serves as the basis for management's reports and
assists in managing inventory.

Products are systematically reviewed for obsolescence, and appropriate accounting
action is taken.

Inventory is periodically reviewed by management and appropriate action taken for
excess inventory and technological obsolescence.

Market studies and quality control tests are ran before new products are introduced.

Long-term contracts are closely monitored.