INV-08

Control Description

Management performs periodic reviews of cycle count inventory accuracy metrics to verify that they meet the thresholds in the policy.

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 Execution Schedule: Define a routine schedule (e.g., monthly or quarterly) in the operational calendar for the warehouse supervisor or inventory controller to pull inventory count logs and discrepancy metrics.

2- Metric Definition & Threshold Review: Extract data from the Difference Analyzer (/SCWM/DIFF_ANALYZER) or MI20 to compute cycle count accuracy metrics (such as absolute variance percentage, item-level accuracy, or dollar-value variance relative to total inventory value) against the corporate policy thresholds (e.g., maintaining > 98 accuracy).

3. Management Review & Sign-Off: Management reviews the computed accuracy rates, investigates root causes for out-of-tolerance variances (e.g., recurring picking errors or process breakdowns), and signs off on the review package to confirm compliance with inventory policy.

Test Procedures

A) Test of Design (ToD)

• Policy Inspection: Inspect the corporate inventory management policy or standard operating procedure to verify that specific cycle count accuracy targets or thresholds (e.g., percentage accuracy goals) and required periodic review intervals 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 underlying accuracy metrics or discrepancy logs were pulled directly from SAP standard reporting tools (/SCWM/DIFF_ANALYZER or agreed upon report) as of the period-end date.

◘ Evidence that management evaluated the calculated accuracy rates against the predefined policy thresholds.

◘ Formal sign-off, date stamps, and documented follow-up or root-cause analysis for any periods where accuracy fell below the required threshold.