Study unit 7.4

Question 1

What is good basic control activities in the manufacturing and production sector

Answer 1

Segregation of duties
Proper documents - sequenced and pre-printed (material requisitions, GRN, job cards, production schedules, transfer notes)
Access and physical controls over assets and records
Authorisation of transfers
Independent reviews

Question 2

What is the transfer documents in the manufacturing and production sector

Answer 2

In receiving bay to warehouse - receives purchase order & issue goods received note
In raw materials to factory - receives material requisitions note & issue material issue note
In factory to finished goods warehouse - receives goods transfer note, receives sales order/picking slip & issue delivery note

Question 3

What is the manufacturing process

Answer 3

Production planning:
*Draft a production plan/schedule and sent to factory
*Production order/job order is made out
*to plan the production process
*determine production needs, determine raw material needs and request raw materials
*a costing schedule must be prepared for all products to be manufactured whether on job-cost basis or process costing basis
Transfer of raw materials to manufacturing
Accounting of raw material transfer
Manufacturing:
*to control the production process
*comparisons and reconciliation of raw materials received and finished goods manufactured, inspection of the quality of the finished goods
*receives a production plan/order/job order
*prepares a production schedule/job card
*prepares a production report
*issue a raw material requisition based on the order
*receives the raw material transfer note
*production reports/shift reports
*issues a finished goods transfer note
*inventory count sheets
Accounting of manufacturing

Question 4

Finished goods

Answer 4

Transfer of finished goods from factory to finished goods warehouse:
*no movement of inventory should take place without an authorising document (sequenced)
*no movement of inventory should take place without the movement being recorded
*whenever there is a transfer of inventory between sections, both the deliverer and the receiver should acknowledge the transfer by signing the document after checking descriptions, quality and quantity against supporting documents
*documents should be sequenced and filed numerically
*documents must be sequenced checked and missing documents investigated
*recording of the inventory on the perpetual inventory system should be checked by the accountant to ensure it has been accurately and completely recorded
Storage of finished goods
Accounting - maintenance of finished goods inventory records