INV-07

Control Description

ABC cycle count indicators are configured in SAP to specify the frequency of inventory counts for materials depending on the assignment of A, B, or C indicators

Risk

Inaccurate inventory valuation and financial statement misstatement due to the failure to perform timely physical inventory cycle counts for high-value or high-velocity materials, or unauthorized modification of ABC cycle counting classification parameters in SAP S/4HANA

Implementation Details

Implementation Details
• Access SAP Customizing (IMG): Navigate to the configuration path: Materials Management -> Inventory Management and Physical Inventory -> Cycle Counting.

• Define Cycle Counting Indicators: Set up the distinct ABC indicators (e.g., A, B, C) and define the cycle counting parameters (such as the maximum allowed count interval in months or workdays) for the in-scope plant

Test Procedures

A) Test of Design (ToD) and Operating Effectiveness
• Configuration Inspection: Navigate via transaction SM30 or the IMG path (Materials Management -> Inventory Management and Physical Inventory -> Cycle Counting) for the in-scope plant

B) Confirm that cycle counting indicators (A, B, and C) are properly established with defined, logical count intervals (e.g., shorter intervals for high-priority Class A items, longer intervals for Class C items) to enforce appropriate count frequency rules.