Manufacturing companies have many of the standard ledgers and purchasing and payroll can be key concerns. However, the main business area is inventories.

Inventories (stocks) and Work-in-progress

There is normally a master or balances file that contains details of inventory holdings at a particular date. Costs may be held in a separate file. Transaction history can be particularly useful although file sizes are often quite large. Selling prices normally have to be picked up from a separate file.

The following are commonly used tests (grouped by type).


  • Age stock by date of receipt
  • Compute the number of months stock of each item held based on either sales or purchases. Produce a summary of this information
  • Stratify balances by value bands
  • Statistically analyse usage and ordering to improve turnover
  • Summarise products by group, location, type, etc.
  • Report of products in order of profitability
  • Reconcile physical counts to computed amounts


  • Cast (or total) the file, providing sub-totals of the categories of inventory
  • Re-perform any calculations involved in arriving at the final stock quantities and values
  • Re-perform material and labour cost calculations on assembled items

Exception Tests

  • Identify and total stock held in excess of maximum and minimum stock levels
  • Identify and total obsolete or damaged stock
  • Identify items with excessive or negligible selling or cost prices
  • Identify differences arising from physical stock counts
  • Test for movements with dates or reference numbers not in the correct period (cut off)
  • Identify balances which include unusual items (e.g., adjustments)
  • Identify work in progress which has been open for an unreasonable period
  • Identify stocks acquired from group companies
  • Isolate products with cost greater than retail price, with zero quantities or with zero prices

Gaps and Duplicates

  • Test for missing stock ticket numbers
  • Test for missing transaction numbers
  • Identify duplicate stock items

Matching and Comparing

  • Compare files at two dates to identify new or deleted stock lines or to identify significant fluctuations in cost or selling price
  • Compare cost and selling price and identify items where cost exceeds net realisable value
  • Compare value of physical counts to generate ledger amounts
  • Check work orders for accuracy against original sales orders

Cash Disbursements

  • Reconcile inter-company transfers
  • Summarise cash disbursements by account, bank, group, vendor, etc.
  • Generate vendor cash activity summary for contract negotiations

Purchase Orders

  • Extract pricing and receipt quantity variations by vendor and purchase order
  • Track scheduled receipt dates versus actual receipt dates
  • Identify duplicate purchase orders or receipts without purchase orders
  • Reduce inventory by comparing projected receipts to available stock
  • Analyse late shipments for impact on jobs, projects or sales orders due
  • Reconcile receipts by comparing accured payable to received items


  • Merge products on work orders and sale as orders for new demand analysis
  • Use net demand analysis against inventory and purchase orders to generate a quick material requirement planning report
  • Check work orders, by size, priority, for lease to shop floor
  • Produce shop floor activity report by any item
  • Generate comparison of planned versus actual labour, materials and time
  • Reconcile job tickets or time cars to work order line items

See Also