Accounting Best Practices, Fifth Edition

Summary

This chapter covered many best practices that improve the accuracy of the inventory database and the speed with which transactions are recorded. By doing so, the accounting department can be assured of much better accuracy in the inventory valuation figures it records in the financial statements, which has the related benefit of reducing any chance of error in the reported level of profitability. Also, a number of best practices should shrink the amount of on-hand inventory, which reduces the risk that inaccurate inventory information will have a significant impact on reported financial results.

Unfortunately, the bulk of the best practices noted here are ones that must be implemented and maintained by the warehouse and engineering departments, which means that the controller cannot use any direct authority to ensure their completion and use. Instead, this is a case where active persuasion is the key component of the implementation effort on the part of the controller.

For more information about inventory best practices, please refer to Bragg, Inventory Best Practices (Wiley, 2004).