This audit report focuses the distribution sales process, including: current distributor contracts and compliance with established parameters, credit memo data over a six-month period, and internal processes for validating distributors' credit memo claims. Objectives include: evaluate internal control effectiveness/efficiency, identify areas for improvements, and provide analysis scorecard of the company’s practices against “best practices”.
The following are key observations noted during the review:
- Inventory validation counts on company inventory in distributors’ warehouses are not performed on a regular basis.
- Distributor audits have been performed in the past, but are not done on a consistent basis.
- Invalid ship-and-debit credits are being issued for invalid claims by distributors.