WIP Audit

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Vivek Kumar Verma

Vivek Kumar Verma (Querist)
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02 July 2009 Please tell me how to proceed with the WIP Audit of a pharma Company.and what all documents are needed????

chetan soni

chetan soni (Expert)
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02 July 2009 Take the certified stock summary from the GM factory.

Now after that, follow below steps

1. Check the raw material status
2. Check the semi processed material (as certify by the production manager)
Please use your skill & check the % of semi processed material as per process costing method

Experts please comment more on this.

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)
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03 July 2009 Hi,

Work In progress is a critical part of the Stock as here the timing of stock take makes the Difference. As in many companies the production is carried out 24X7 its not easy to take WIP stock. So the Important aspects include:
a) Proper stock take with due consideration to production log books and ensuring that the cut-off is properly taken.
b) The WIP must have their unique stock codes specifically when it comes to Pharma Industry. The codewise and stagewise stocks need to be compiled and then checked with the book stock including log books.
c) On the valuation , part the composition of WIP is more important specifically in Pharma. As said before based on the CODES you must see the Bill of material and arrive at the cost of the same. Allocation of overheads up to the point of WIP is also to be done prudently.
d)Collect data on Non Moving WIP and also the Expired stock as it is in Pharma. All these need to be valued at lower rates or provided for.
e)Obtain teh reconciliation for WIP from Opening stock to Closing stock and compare with physical stock.
f)Finally check the Internal controls adopted by Management. Frequent Physical verification,Monthly reconciliation, tallying the GL value with Stock ledger etc.

Hope this is useful
Rgds

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