這是我們2017年為澳洲悉尼大學的客戶創作的essay，全文1400字，以Inventory management system and internal control process case study 為題，這篇文章是一篇審計auditing的assignment，在introduction部分首先介紹整篇essay的研究案例和研究方向。
This essay will evaluate the inventory management system and internal control process of Cool and Cute (C&C), a clothes company with self-operated retailing stores located in Australia, Ireland and New Zealand, therefore C&C is a multinational company, and the challenge of inventory management and internal control is also influenced by its diverse distribution of retailing stores in different countries. The first part will discuss and figure out control weaknesses in inventory system, and the second part will discuss and figure out control strengths in the inventory system. The last part will discuss possible substantive audit procedures at year end.
|Identify a control weakness||How the weakness may affect financial statements||Audit procedures to address the control weakness|
|Order control with suppliers and shipping|
The suppliers control lacks solutions in front of problems that have been faced with suppliers and shipping procedure, such as delay of production, not qualified product after receiving, re-shipping of order from the suppliers and etc.
|The problem that happens to the suppliers and shipping procedure will make the not accurate inventory information and imbalance when the inventory count, but since the inventory only happens once per year, the mistake of suppliers and shipping will not be referred to, brining more problem for the auditing procedure and financial statement preparation.||The receiving inventory procedure should add a new procedure on checking the quality, time of arrival and other issues related to the cargo arrived, and then provide feedback to the suppliers, and then label the inventory as "irregular", with brief information on how the problem is. When the problem is settled, the warehouse could adjust the condition of the cargo. The balance should be delayed to be paid when the condition of inventory is "irregular".|
|Control over inventory distribution|
The problem within the inventory distributing is that it lacks the procedure to re-distribute inventory between stores near to each store, especially for stores with too many items not sold for 4 weeks or more, but in fact this item is sold well in the nearby store.
|This weakness on inventory control will result in the increase inventory and imbalanced inventory distribution between different stores. The weakness will result in significant inconsistence inventory between different store, such as zero inventory in one store but high inventory in another.||The FlowRight system should be added with a re-distribution function to allow store manager to search for inventory condition in stores within the same city, and then upload inventory requirement to the system, which will be sent to nearby stores automatically. Stores that receive the requirement will send the inventory by express to the store that sent the requirement.|
|Low frequency of inventory count|
The current frequency of inventory check is very low, therefore large amount of differences between the FlowRight system and the actual inventory in store could not be solved after the counting.
|This will increase the operating expense, since the missed inventory will not be checked after the counting, and the depreciation of inventory will be significant. Even the auditor has found mistakes and problems, the store manager could not provide reliable explanations to clear the difference of inventory and the FlowRIght system data.||The frequency of inventory count should be once every two weeks, and any difference should be explained with evidence provided by the store manager. Smart inventory counting system should be applied. Another solution is to require store manager to prepare and reserve evidence day-by-day and deliver the evidence at the end day of the year.|
|The sales control for sales return|
Currently the sales control system will change the FlowRight system, but when the sales return happens, the inconsistence between FlowRight and actual inventory might be caused.
|The inconsistence between sales and cash flow statement, since some items are returned, but the FlowRight system is not updated with the return incidence.||FlowRight should be functioned with the consistence check with the Accuratesale, therefore the sales return will be discovered and the data on FlowRight will be updated.|
The above analysis has shown the strength and weakness of the inventory control system of the company of C&C. The main strength is mainly in the checking procedure to ensure the correctness of FlowRight data at the beginning. The main weakness is on the perspective of distribution inventory and sales control of inventory. The substantive audit procedure at the end year of inventory checking is listed on the perspective of occurrence, accuracy and completeness.