CA Niteshkumar Delvadiya

Case study We have been appointed to conduct stores and spares inventory verification on perpetual basis. Stores and spares inventory includes some of the critical parts used for plant and machinery and other stores and spares inventory items.   When we started work in the year 2011 there were 33000 items valuing around 100 crores.   Working by Team We have deployed audit team for conducting inventory verification on day to day basis. I was used to visit the client place regularly every two or three months.   Our major observation At the time of my visit I was used to visit Main Store, Mechanical Department, Repairing Yard and Plant Area. During our visit I observed that there were many critical parts lying on the floor near the main plant including some of the high value cables were lying in the plant area. Some of the high value inventory items but not critical were also found in the yard and near walkway or some of the isolated places in the plant. ...

A client having more than 11 operational plants and more than 400 products. They have been using Oracle as their ERP system. With Oracle, the client had implemented only finance module, production & inventory valuation was done through Excel. Account & finance team used to compile the data related to production and inventories from the production department. Inventory valuation was done based on the standard costing defined at time of implementation of the plants or starting of the new product even though it was older than 20-25 years.  Analysis  We have compiled the data like production, sales, average sells price during the year of the each product. Also collected data for raw material consumption, power consumption and labour utilisation including repair maintenance of each plant, all the variable cost and identified some other variable overheads related to particular products and plants. There were some products which needs to be process repeatedly to improve stre...