Study Of The Internal Control Issues Of Inventory Management In J Pharmaceutical Corporation

In the last few years, there are many problems in our country management. One of the prime reasons of these problems is the invalidation of internal control. How to build up a perfect internal control has become one of the important problems at present. In American, Enron Corporation caused the focus on the internal control, which accelerate the introduction of Oarbanes-Oxley Act and Enterprise Risk Management. The fast response to handle the problems gives us a good example. With the economy developing, companies face a more and more drastic investors, which lead a far-reaching meaning.At the same time, with the constant and fast development of market economy, Joint-stock company has already become the world’s major economic entities. Because of the separation of corporate ownership and control, there has become the phenomenon of asymmetric information between business operators and owners. In order to solve the management difficulty, internal control comes. It has become an indispensable part of today’s internal management and an important way of the management in corporate.As an important part of current asset, inventory has become an indispensable part in daily management of assets. Strengthen the management of inventory can reduce inventory errors and the happening of fraud. At the same time, it can urge enterprises to continuously strengthen cost control. It has become the guarantee of the achievement of management goals and the carrying out of management and decision-making.-Also it has become the guarantee of maintaining the security and integrity of current assets as well as accounting information authenticity.Medicine industry is beneficial to the people’s livelihood, it is the insurance that the people live and work in peace. At present, medicine safety incidents occurred one after another, leading to the consumer to a great extent on the medicine industry to produce distrust, the development of the medicine industry has encountered some obstacles, to strengthen the medicine industry has become an important topic of internal control industry inventory management.The inventory management in pharmaceutical industry has its particularity. For one reason, as an important industry which maters public health, its management is difficult. Our nation requires pharmaceutical commercial enterprises’internal control system design must obey GSP, which is good supplying practice. Otherwise, its drug business license will be canceled. For another reason, J pharmaceutical company supplies narcotic drug and Chinese herbal medicine. As a result of it, compared with other pharmaceutical commercial enterprises, J pharmaceutical company has a large amount of the two parts of drug inventory which made up of up to 40%of the whole inventory. At the same time, its narcotic drug and Chinese herbal medicine has a strict protecting policy. It has been clearly pointed out that it needs particular temperature and humidity to maintain the certain Chinese herbal medicine. Moreover, narcotic drug needs particular person and particular place to maintain.Then, let us talk about the source of the inventory, J pharmaceutical commercial corporation maintain a great relationship with its suppliers and partners. Most inventory comes from certain suppliers,the percentage is about 25%,so that procurement concentration is high.That means pharmaceutical commercial corporation is really special among all the pharmaceutical corporations. It provides services for both suppliers and customers. From this angle, it is likely to disobey the current internal control rules if the circumstance is urgent, or it is the suppliers and the customers’request.For another reason, inventory business is large and frequent, and it mentions plenty of departments throughout the corporation, such as making purchase plan, signing the purchase contract, ordering of purchase and accepting warehousing, accounting settlement and accounting etc. As a result of it, cheating is likely to occur. So establishing the internal control system of inventory management which is in line with the modern enterprise management structure has very important practical significance to the pharmaceutical commercial enterprises.This paper stated the relevant basic theories, expounding the method of comparative analysis which can evaluate the concepts and theories of control activities in companies. Through the description of business of enterprises, we can find out the problems of key factors which are regarded as the basis of evaluation index system of control activities. The evaluation index system of control activities are made up of 22 indicators which are selected from sis different aspects. The paper constructs evaluation model by fuzzy comprehensive evaluation method in order to evaluate the control activities of J pharmaceutical company.Based on the consideration above, in order to protect the safety and quality of medicine industry, ensure the safety, the reliability of inventory management in pharmaceutical corporations, guarantee the correctness and efficiency of the production process, improve efficiency in the use of inventory, we choose J Pharmaceutical Corporation as an example.We start from the basic theory of internal control, such as COSO framework. In other words, it means describing the relevant theories at home and abroad about internal control and inventory management, and then we sum up the relevant concept and theories of inventory internal control, particularity and expounds the medicine industry of internal control and management of inventory. Then we describe the basic theory of COSO framework, then the theory and practice of internal control and inventory management at home and abroad are reviewed and we also elaborate the particularity of inventory internal control in pharmaceutical commercial corporation including its department and history. After that, we introduce the development of J Pharmaceutical Corporation and the current statement of inventory internal control in J Pharmaceutical Corporation, then we discuss the remaining problem and dig the reasons, in the end, we put forward the suggestion of improving the internal control of the J Pharmaceutical Corporation according to the COSO framework, including inventory internal control activities, information and communication, monitoring and feedback. So we can provide the J Pharmaceutical Corporation with a set of theoretical basis and practical business guidance of inventory management process to reduce the risk of J Pharmaceutical Corporation’s inventory management.To sum up, this study is helpful to improve the management level of J Pharmaceutical Corporation, improve J Pharmaceutical Corporation’s internal control system, improve the economic benefit of J Pharmaceutical Corporation.