Question

What are some internal controls for inventory? How do these controls change between industries?

Answer 1

Some of the internal controls for inventory are

Having proper warehouse for storing goods especially perishable goods

Counting of all inventories which have been purchased and stored in the warehouse

Counting of all inventories which have been sold. This will help to reconcile the inventory in the warehouse

It is necessary that all inventories are tagged or name according to their description so that there is no confusion on similar item inventories

To differentiate the investories which have been sold to the customers based on the order received from the customers in the warehouse

There should be register for recording and signing the inventory which have come in and gone out.

These controls may change between industries based on the goods, based on the warehouse or storehouse of the goods. For Industries manufacturing perishable goods strong internal controls would be required to maintain the inventory as otherwise the damage to the inventories would be high. In ecommerce industries it will be necessary for the companies to have proper and complete stock of inventory as the orders are placed by the customers online.