Wa Force Inventory Compliance Report
CBU’s new computer system for tracking and calculating inventory costs installed on January 1 overstates inventory by $1.0 million when compared with the physical inventory count performed at year-end closing, December 31.
An effective and timely system control coupled with an integrated computer based system and manual components for tracking and calculating inventory costs will reduce material discrepancies at year end closing. I agree with Accountant B who suggests that CBU accountants should develop a better system of control to prevent such material variance between the computerized system and the physical inventory count.
The computer system installed was fairly new therefore CBU accountants proceeded correctly when they followed the internal control procedures of a regular physical inventory count; nevertheless I can conclude that the count was not performed on a regular schedule from January to December, when considering the material discrepancy. Walters, Schmidt, and Newton (2006) state that the cycle counting methods used on a regular basis throughout the year will secure a high level of inventory accuracy. A better system of control is needed to prevent future costly errors because the physical inventory count performed at year-end is time consuming. The new computer system …show more content…
The SFA software automates sales tasks such as inventory monitoring (Gelinas et al., 2015). A frequent performance of the chosen cycle counting process will reduce the inaccuracies, assist the accountants to discover reasons for the discrepancy instead of correcting it with an adjusting entry, and may eliminate the annual physical inventory count and provide timely and effective system control (Walters et al., 2006). It is essential to know the root cause of the error so that it can be avoided or minimize in the
An effective and timely system control coupled with an integrated computer based system and manual components for tracking and calculating inventory costs will reduce material discrepancies at year end closing. I agree with Accountant B who suggests that CBU accountants should develop a better system of control to prevent such material variance between the computerized system and the physical inventory count.
The computer system installed was fairly new therefore CBU accountants proceeded correctly when they followed the internal control procedures of a regular physical inventory count; nevertheless I can conclude that the count was not performed on a regular schedule from January to December, when considering the material discrepancy. Walters, Schmidt, and Newton (2006) state that the cycle counting methods used on a regular basis throughout the year will secure a high level of inventory accuracy. A better system of control is needed to prevent future costly errors because the physical inventory count performed at year-end is time consuming. The new computer system …show more content…
The SFA software automates sales tasks such as inventory monitoring (Gelinas et al., 2015). A frequent performance of the chosen cycle counting process will reduce the inaccuracies, assist the accountants to discover reasons for the discrepancy instead of correcting it with an adjusting entry, and may eliminate the annual physical inventory count and provide timely and effective system control (Walters et al., 2006). It is essential to know the root cause of the error so that it can be avoided or minimize in the