3 Index S. No.ContentsPage No. 9. Inventory 26 - 27 10. Sale of Scrap 28 - 29 11. Issue of tools 30 - 31 12. Accounts 32 - 33 13. ISO Compliance 34 - 34 14. Overall Checks 35 - 37 15. General Checks 38 - 39
4 1.Objective Ensure that all the systems & procedures are being followed in accordance with ISO systems & procedure. Understand all the processes of receipt & issues of Inventory make flow charts for all processes. Identify bottlenecks in the above processes production & the reasons there of. Work out the investment in inventory.
5 Objective Summary How much value addition we can contribute wherein minimum inventory is maintained without effecting productivity.
6 2.Receipts & Quality Check Obtain list of persons authorized to sign the Goods Inward Note. Ensure that Goods Inward Note is prepared within 24 hours of receipt of material at the gate. Check that Goods Inward Note has been prepared for all gate entries by taking the Gate Entry Register and comparing the same with Goods Inward Notes.
7 Ensure that Goods Inward Note has been made only against valid Purchase Order / Indent and all terms and conditions of purchase order have been complied with. Check the Goods Inward Notes pending at stores for reason of inspection / Quality Control Analyze the reason of delay of pendencies. Check, material rejection report and ensure that Goods Inward Note is made for accepted quantity only.
8 Ensure that Quality Control is done within reasonable time. And analyze the time taken by Quality Control. Analyze the Goods Inward Notes where abnormal time is taken by the Quality Control Department. Ensure authenticity of data recorded in the Goods Inward Note in relation to item code, name, Quantity received / rejected, Cost, Statutory duties and freight.
9 Check that material is being unloaded only on receipt of Form 31 for individual purchases above Rs. 5,000 alternatively, proper intimation is being sent to purchase department. Verify pending Form 31 from sales tax department against which Goods Inward Note has been made/ not made and analyze the same.
10 For Receipt and Issue of liquid material like High Speed Diesel, Low Density Oils, Furnace Oil, Resins ensure that a. T erms and conditions of the contract with the transporter are complied with. b. Quality check and Weightment, dip is taken of all tankers before unloading. c.Analysis the time taken for unloading the tanker from the time it enters the gate and time it is out.
11 3.Issues Obtain the list of persons authorised to sign the issue slip. Ensure that issue slips are machine pre- numbered and duly authorized. Ensure authenticity of data recorded in the Issues Slips in relation to item code, name, department, Quantity indented, Quantity in Stock and Quantity issued.
12 Analyze issue slips to ensure these have been properly recorded by the stores. Analyze reasons of differences if any.
13 Analyze inventory along with reasons for the following. a.Material received not consumed for more than 120 days 180 days 1 year 2 years 3 years
14 b. Obsolete / damage stock c. Material identified as Scrap / disposable, not Scraped / disposed. d. I ndents against which material has not b een received.
15 4.Physical Verification 1.Obtain list of records maintained at the stores and follow the cut off procedure Initial along with the stores representative stores documents wherever necessary before verification. 2.Verify the system of storing of material. 3.Ensure each item is identifiable either by code or Bin card.
16 4. Obtain the following from the stores Area plan for Storing and issuing of goods including rejection yards. ABC analysis of the items in stocks. Signatures of authorized persons 5. Check whether there is any rejection yard at stores. If not, check the procedure of identification and storage of rejected material.
17 5.Levels 1.Obtain the item wise details of Critical item, minimum, reorder, Maximum levels defined by stores. 2.Analysis the adherence to levels. Along with the basis of defining such levels. 3.Compute carrying cost for excess holding and opportunity cost for lower holding of material than its levels.
18 4.Examine list of items that are frequently ‘Critical’ and hampering production. Review efforts made to ensure better flow of such material.
19 6.Rejection 1.Ensure that rejection slip is prepared for material returned from the shop floor. 2.Ensure that debit notes have been raised for all material rejected/ returned to party. 3.Ensure that material has been stored separately and analysis the reason of non-return of the same to supplier.
20 7.Returnable Gate Pass When goods purchased by the company, are sent outside the premises of the company for any job work/ improvement/ value additions; such material transfer does not constitute sales and this material always came back. Hence, send on “Returnable Gate Pass” challan. Returnable Gate Pass challan should be made and controlled by the store department only.
21 1. Obtain the list of authorised signatories for material to be sent on Returnable Gate Pass. 2.Verify documentation for all material sent on Returnable Gate Pass. 3. Reconcile the Returnable Gate Pass control register at store and Returnable Gate Pass control register at gate. 4. Verify that store department does such reconciliation on periodic basis.
22 5.Verify that all material send is duly authorized and accounted. 6.Ensure that pending Returnable Gate Pass is reviewed periodically and adequate follow-up exists. 7. For excisable goods, separate Returnable Gate Pass control is exercised and shall be checked on the same line as above; [excisable goods need to be received within 180 days of its outward entry].
23 8.Cross check in/ out date of Returnable Gate Pass register with gate records. 9.Verify that proper controls are maintained over Returnable Gate Pass booklet, used/ unused/ being used and its control register. All Returnable Gate Pass challans should be machine pre- numbered.
24 8.Not Returnable – Outward Gate Pass Items which are sent free of cost basis, sample basis, rejected items and items which are not indented for return [excluding sales] are sent on Outward Gate Pass/ Not returnable.
25 1.Obtain the list of authorised signatories for material to be sent on Returnable Gate Pass. 2.Verify Outward Gate Pass with Outward Gate Pass register and reconcile Outward Gate Pass register with gate register. 3. Analysis the reason of Outward Gate Pass and ensure that debit notes have been raised wherever applicable say in case of rejections, return etc.
26 9.Inventory 1.Ensure that daily report of receipt and issue is being sent to excise department. 2.Prepare the ageing of raw material lying in store. 3.Prepare monthly and cumulative consumption analysis of miscellaneous items, department wise. Analysis the monthly trend of consumption.
27 4.Analysis the holding period of raw material and miscellaneous items. a)Take month wise and item wise issue from store and work out average daily consumption. b)Compare the same. 5.Verify the stock of spares along with their ageing and value as per stores, compare value with account specially where spares have been received on free of cost basis.
28 10.Sale of Scrap 1.Obtain the list of persons who are authorised for ascertainment of scrap. 2.Verify the procedure of sale of scrap and its price fixation. 3.Verify the system of weightment of scrap.
29 4.Verify the preparation of sales invoice. 5.Verify the accounting entries and receipt of money.
30 11.Issue of Tools on Permanent/ Temporary basis 1.Obtain the list of persons authorised for issue of tools on permanent and temporary basis. 2.Verify the permanent & temporary tool issue register. 3. Verify that temporary tools are returned back within reasonable time.
31 4.Ensure that all tools are returned by employee before his full and final. 5.Verify the system of physical verification of tools. Such verification sheet should be duly authorized.
32 12.Accounts 1.Check the system of valuation of stock material, consumables, spares. 2.Verify that all costs are taken into consideration as defined by Accounting Standard - 2. 3.Verify that valuation done by stores is in agreement with Accounts.
33 4.Verify that closing balances of the financial year are correctly carried forward to next financial year with regard to quantity and value in store register. 5.For quantitative control ensure that items received as free of cost are valued at Rs. 1/- per unit. 6.Check the pending Goods Inward Note statement as per books of accounts and analyze the reason for the same.
34 13.The international organization for standardization (ISO) 1.Which ISO system is being followed by the division. 2. Prepare Checklist of all requirements of ISO. 3.Ensure that all the requirements are being properly followed. 4.Report non adherence to ISO systems & procedures.
35 14.Overall Checks Prepare a cycle time analysis for major items of raw material, consumables stores and spares from the date of indent to the date of utilization, covering the complete lead time of all processes. To Elaborate – 1. Date of Indent 2. Date of placing of purchase order
36 3. Expected date of receipt of material as mentioned in purchase order. 4. Actual date of Receipt of Material 5. Date of Preparation of Goods Inward Note 6. Date of receipt of bill from the party 7. Date of Payment by accounts
37 8. Date from issue of material by stores 9. Date of consumption of the material by the user department.
38 15.General Checks 1.Check whether there is any material like drums, empty containers which are purchased with material and which can be subsequently sold or used and examine the system of using / scrapping/ storage of such material. 2. a)Make the list of reports generated by store department and send to other departments. b)Check and analyze such reports.
39 3.Check the system of periodical reconciliation of excise records with stores 4.Ensure that license from explosive department is there and same is valid for storage of hazardous material in factory.