Unlock the potential of your inventory management with our attached audit tool, a strategic resource designed to elevate operational efficiency and enhance internal controls. This tool serves as a guide for organizations seeking to implement effective inventory policies and procedures that not only protect assets but also ensure compliance with regulatory standards. By harnessing the insights contained within, subscribers can optimize their resource allocation and streamline processes, ultimately driving greater accuracy and financial integrity in their operations.

This document includes three sample policies, each tailored to address critical components of inventory management. Sample 1 establishes essential guidelines for inventory control and valuation, ensuring that all items are accurately priced and safeguarded against loss. Sample 2 delves into the classification of inventory types, detailing responsibilities and procedures for managing reserves and adjustments across various categories such as raw materials and finished goods. Sample 3 introduces performance measurement techniques, focusing on key indicators like inventory months on hand (MOH) to assess effectiveness and set improvement targets. Together, these samples provide a well-rounded reference to help organizations implement best-in-class inventory management solutions.

Sample procedures include:

• Inventory account balances at each office should be reconciled to the perpetual inventory listing (ledger) monthly.
• Office personnel must conduct a complete physical inventory at least once a year.
• Projects experiencing delinquent ship dates or production schedule slippages should be analyzed and reviewed.
• Inventory MOH should be calculated by dividing the total amount of variable costs in inventory at month end by the average of the last two months’ actual variable cost of sales.