INV-06

Control Description

Management periodically reviews completed versus scheduled cycle count documents in SAP to ensure all assigned material locations have been fully counted per the established schedule

Risk

Inventory discrepancies may go undetected or uncorrected, leading to misstated inventory balances if management fails to periodically review cycle count accuracy metrics against established policy thresholds.

Implementation Details

1- Periodic Schedule: Establish a recurring cadence (e.g., monthly or quarterly) in the warehouse/inventory close calendar for the inventory control manager to review the status of cycle count documents.

2- Report Execution: Execute standard SAP inventory monitoring tools or queries (such as checking EWM Monitor /SCWM/MON) to pull a comprehensive list of all cycle count documents generated versus those marked as counted/posted for the period.

3. Variance & Exception Follow-Up: Management reviews open or uncompleted count documents past their scheduled due date, investigates operational blockers (e.g., locked bins, inaccessible stock), and ensures rescheduling or completion occurs.

4. Sign-Off & Documentation: Document the review by signing off on the reconciliation workpaper, noting any overdue or uncompleted counts, and archiving the package for audit support.

Test Procedures

A) Test of Design (ToD)

Policy Inspection: Inspect the corporate inventory management policy or standard operating procedure to verify that required periodic reviews of completed versus scheduled cycle counts, review frequencies, and responsibilities are clearly defined.

B) Test of Operating Effectiveness (ToE)
• Review Package Inspection: Select a sample of review periods (e.g., monthly or quarterly reviews) within the audit window. Inspect the completed review packages, verifying:

◘ The status report comparing scheduled versus completed cycle count documents was generated directly from SAP as of the review date.

◘ Evidence that management evaluated uncompleted or overdue count documents against the established schedule.

◘ Formal sign-off, date stamps, and documented follow-up or remediation for any outstanding uncounted locations.