Functional Safeguards - Inventory Management
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- Lay down inventory management procedures, including receipt, storage, security, replenishment, issue, disposal, inventory checks, and handling of discrepancies and record amendments
- Segregate duties and specify roles, duties and approving authorities for inventory functions (e.g. issue, disposal, write-off and amendment of records)
- Maintain proper inventory records, including item identification (code, batch number, description, expiry date); stock movements (date, item, quantity, voucher reference, staff names, location); and stock balance by item type
- Prohibit staff with stock access from amending inventory records
- Use a computerised inventory management system if resources allow; consider barcode or RFID technology to enhance control
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- Require warehouse staff to inspect goods against purchase order specifications and quantities, and certify receipt on invoices or delivery notes
- Assign procurement staff or supervisor to oversee and countersign receipt for large quantity or high-value goods
- Require warehouse staff to report excessive ordering, short delivery or defective goods to supervisor
- Ensure adequate physical security (e.g. lock high-value items, restrict access with electronic control or non-duplicable keys)
- Install CCTV with recording functions to monitor store entrances and premises
- Replace access control passwords or keys upon staff changes
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- Require receiving staff to present inventory request forms approved by appropriate authority and certify receipt
- Require responsible staff to update inventory records promptly
- Strictly enforce "first-in first-out" issue, particularly for items with expiry dates or limited shelf life
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- Require disposal of inventory (e.g. obsolete, damaged, slow-moving) and disposal methods (e.g. destruction, auction sale, donation) to be approved by designated managerial staff not involved in stock-keeping
- Seek competitive price quotations if items are disposed of by sale
- Record all disposals properly, showing approving authority, date, and proof (e.g. sale receipts)
- Require supervisors or independent staff to conduct random checks on items recommended for disposal and inspect the disposal process
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- Assign independent staff (e.g. accounting department) to conduct periodic inventory checks or stocktaking
- Require warehouse supervisors to carry out surprise checks, particularly on high-value items
- Conduct stocktaking when handing over storekeeping duties
- Estimate normal wastage based on operational experience and investigate abnormal stock depletion
- Require all inventory record adjustments to be explained and approved by designated managerial staff
- Produce periodic and year-end inventory control reports for management review (e.g. intake, issue, wastage, disposal, profit or loss from disposal)
