Manufacturing
Manufacturing companies have many of the standard ledgers; purchasing and payroll can be key concerns. However the main business area is inventories.
Inventories (stocks) & work-in-progress
There is normally a master or balances file that contains details of inventory holdings at a particular date. Costs may be held in a separate file. Transaction history can be particularly useful although file sizes are often quite large. Selling prices normally have to be picked up from a separate file.
Tests include:
There is normally a master or balances file that contains details of inventory holdings at a particular date. Costs may be held in a separate file. Transaction history can be particularly useful although file sizes are often quite large. Selling prices normally have to be picked up from a separate file.
Tests include:
Analysis
- Age stock by date of receipt
- Compute the number of months stock of each item held based on either sales or purchases. Produce a summary of this information
- Stratify balances by value bands
- Statistically analyze usage and ordering to improve turnover
- Summarize products by group, location, type, etc,
- Report of products in order of profitability
- Reconcile physical counts to computed amounts
Calculations
- Total the file, providing sub-totals of the categories of inventory
- Re-perform any calculations involved in arriving at the final stock quantities and values
- Re-perform material and labor cost calculations on assembled items
Exception Tests
- Identify and total stock held in excess of maximum and minimum stock levels
- Identify and total obsolete or damaged stock
- Identify any items with excessive or negligible selling or cost prices
- Identify differences arising from physical stock counts
- Test for movements with dates or reference numbers not in the correct period (cut off)
- Identify balances which include unusual items (e.g. adjustments)
- Identify work in progress which has been open for an unreasonable period
- Identify stocks acquired from group companies
- Isolate products with cost greater than retail price, with zero quantities or with zero prices
Gaps and Duplicates
- Test for missing stock ticket numbers
- Test for missing transaction numbers
- Identify duplicate stock items
Matching and Comparing
- Compare files at two dates to identify new or deleted stock lines or to identify significant fluctuations in cost or selling price
- Compare cost and selling price and identify items where cost exceeds net realizable value
- Compare value of physical counts to generate ledger amounts
- Check work orders for accuracy against original sales orders
Other typical area of tests include:
Cash Disbursements
- Reconcile inter-company transfers
- Summarize cash disbursements by account, bank, group, vendor, etc,
- Generate vendor cash activity summary for contract negotiations
Purchase Orders
- Extract pricing and receipt quantity variations by vendor and purchase order
- Track scheduled receipt dates versus actual receipt dates
- Identify duplicate purchase orders or receipts without purchase orders
- Reduce inventory by comparing projected receipts to available stock
- Analyze late shipments for impact on jobs, projects or sales orders due
- Reconcile receipts by comparing accrued payable to received items
Work-in Progress
- Use net demand analysis against inventory and purchase orders to generate a quick material requirement planning report
- Check work orders, by size, priority, for lease to shop floor
- Produce shop floor activity report by any item
- Generate comparison of planned versus actual labor, materials and time
- Reconcile job tickets or time cards to work order line items
