Stock Records Accuracy

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'Stock Records Accuracy' means: (1) a correspondence between what is present on the computer file and what physically exists, in reality, (2) that activities which have been recorded as taking place against stock are truly what in fact occurred, and (3) that no activity which took place is unrecorded in the system. As we shall see, the central stock file is a most important element of any system within the company. The records within the file are 'keyed' on each product's unique item code**. That is , specifying an item code enables the system's user to find and retreive an item's record on the VDU directly. In many companies also, it is necessary or desirable to keep track of physically discrete batches of the item in order to facilitate lot tracing or to differentiate batches of the item having different quality. In addition, in a variable (or 'random') location store or warehouse, since stock of the item is potentially stored in many locations, the stock record will consist of many groups of data under the main item key, with each group within the record showing a quantity of stock and the location where that stock quantity is stored. Many of the data fields on the stock record are unchaging - obvious examples are an item's code, name and unit of measure (eg square feet, each, kilograms). Other data elements are relatively static, but do change from time to time. Examples are annual usage, standard cost or standard purchase price. Although the concern of this on-line Course is with stock quantities, procedures should be in place to update static and semi-static data as needs be. As well, one might also regard the transactions raised in the course of maintaining the system as being part of the stock record. Although the role of transactions is to change the main record, by communicating through the system data relating to what has physically occurred so that it can be used to modify the main record, such transactions can be displayed separately and independently, and examined as part of an 'audit trail'. {text:bookmark-start} {text:bookmark-end} 1.1 The Value of Stock Records Accuracy It is important to identify the value of stock records accuracy for three reasons: 1. By quantifying the value of accuracy ... or alternatively, the cost of inaccuracy ... we will obtain valuable insight into what objectives we should aim for; 2. By identifying where inaccuracy is having the greatest positive or negative effect, we will see where best to concentrate our attention; 3. The value of records accuracy tells us how important it is to get the data right, and how justified we are in going to what may seem as relatively extreme lengths to achieve very high standards of exactness. *One value of accuracy is the avoidance of costs *associated with inaccuracy. These include (a) split batches and short production runs (because there turned out to be insufficient material to start a full production job**); (b) failures to meet deliveries (having promised the delivery on the basis of the computer record, the material was short when it came to picking it physically)**; (c) spoilage and obsolescence (unknown material eventually stumbled upon);** (d) double handling (a location supposed to be empty according to the record turns out to be occupied)**; (e) excess stock holding (other staff may not know if you are holding a little **too much of a product, but everyone in the company knows if you run out !). *A third value of records accuracy is to maintain financial control*. There are two reasons why the accountant must verify on an annual basis the value of all stock held. The first** is the place of stock on the balance sheet**. The balance sheet is struck at the end of the company's financial year, and states its assets and liabilities. Assets are split between fixed assets (machinery, land and buildings) and 'current' assets (cash, debtors and stock). Stock is regarded as an asset since it is acquired (ie made) speculatively, in...
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