- May 28, 2020
- Posted by: IBA LLP
- Category: Assurance & Attestation
Client Industry : Automobile Industry
The group was mainly engaged in the manufacturing of automobile components. Entity receives different types of materials like Raw material, components, consumables, maintenance items on daily basis. Management has concern whether all the internal systems and procedures are being followed and whether all the concerned persons are performing their duties effectively and efficiently. Thus, the client approached us to audit the existing process of incoming material and draft the SOP of the process.
Our approach and findings :
Our audit team reviewed the existing policies and physically verified the whole process of incoming material along with documents to be maintained at each stage and observed following process gaps:
- No timings have been fixed for the incoming material. Goods are taken inside as they arrive at the factory gate.
- Material is being received without purchase order
- Material inward register is not properly maintained. It does not contain information like, invoice no. part code etc
- No control is there to prevent the entry of unauthorised persons in the incoming store
- No categorization and identification of ‘OK’, deviated and rejected material after quality inspection
We successfully conducted the audit and recommend the management for improvement in following key areas.
- For effective controlling of material, material receiving time needs to be fixed and accordingly need to inform our suppliers for adherence of these timings
- Material should not be allowed to in if PO reference is not mentioned on invoice
- Material inward register should be maintained with requisite details
- Only authorised person should have access to incoming store
- “QUANTITY VERFIED OK’ stamp should be affixed on the invoice once the quantity is verified by the store person
- After quality inspection material should be categorised using tags
- Green tag for OK material
- Yellow tag for deviated material
- Red tag for rejected material