Research On P Corporation Internal Control Of Inventory Management

Currently, the global economy hasn't completely recovered from the economic crisis and still grows quite slowly. Meanwhile, the economy growth rate of China has slowed down to nearly 7 percent in 2015. As a result, the domestic demand in China shrank and the export volume reduced, which posed unprecedented challenges for Chinese enterprises, especially for the manufacturing enterprises. Manufacturing industry is the pillar industry of China's economy. Currently, enterprises hold inventories for various reasons. As a result, the proportions of inventory in the total assets of companies are very large. It's another important factor that affects the profits of enterprises. Rational management of inventory and the proper reduction of inventory could bring significant economic profits to the company. Nowadays it sometimes occurs that enterprises suffer from the loss due to capital chain rupture and inventory depreciation which usually caused by the high finished product inventory and raw material overstock. The inventory backlog and the turnover are not ideal, which has hindered the development of the enterprises. But now enterprise leaders gradually realize the importance of improving the quality of internal control and building a comprehensive internal control system suitable for the industry. The inventories manage and using are usually critical to the using level of companies' funds and the efficiency of operation. The attention of internal control increases gradually with the rapid development of economy, and becomes the center of modern enterprise management system. The study of internal control equipment manufacturing enterprises has certain practical significance. For P Corporation, therefore, it is urgent greatly to establish effective inventory internal control.Inventory is the most important assets, packaging manufacturing enterprises, according to the objective analysis of survey data shows the packaging manufacturing industry development space is huge. As an important part of current assets, inventory in the enterprise asset management have the weight. Inventory has a wide varieties of types, including raw materials, packaging materials, consumables, processing materials, semi-finished products and finished products, which would bring a huge difficulty to the management of inventory,with the speed of turnaround, is will have a great influence on the company's assets and profit. Internal control relates to different aspects of enterprise management. In terms of the whole enterprise internal control system, internal control of inventory management is an indispensable part. As for the manufacturing companies, inventory serves as the core resource for their production. Inventory management runs through the whole production and management process. Any inventory problem may eventually result in production disruptions, circulating funds occupation, and assets depreciation or loss. The perfect inventory internal control, on the one hand, can protect the safety and integrity of the inventory assets, on the other hand, can effectively reduce the inventory cost and risk through controlling the key process of inventory. A comprehensive inventory internal control system suitable for the enterprise's production characteristics will not only greatly reduce the probability of inventory damage, loss or overstock, but also ensure that relevant information is correctly recorded in the process. In addition, it effectively controls production cost in cost accounting, enabling the enterprise to develop in increasingly competitive foreign and domestic markets. P corporation inventory internal control exist in information communication, the stock proportion on the high side, unreasonable inventory structure distribution, inventory management method backward, inventory internal control system is not sound and other issues exposed completely. due to its inventory internal control is not perfect, it leads to the inventory management shortcomings, in the short term, this will affect the profitability of the enterprise, in the long run, will endanger the enterprise survival and development. Though P Corporation drew up a set of internal inventory control system, it has not established an effective control environment, and the employees have not established the concept of internal control. The internal control system is lack of monitoring, and can't regulate employees'behavior.Based on the theories of inventory internal control and an analysis of the current inventory internal control situation of P Corporation, each link of inventory circulation is studied with consideration to the characteristics of the production and industry. This paper analyzes the present situation of such links as procurement, acceptance, warehousing, production, storage and delivery, and discusses the problems in P corporation's inventory internal control that result from incomplete inventory internal control system, weak risk management consciousness, non-standardized inventory internal control activities, inadequate communication among different departments, and lax internal supervision. At the end of this paper, suggestions are offered for inadequate links in P Corporation inventory internal control system based on enterprise internal control criteria, in the hope of improving enterprise inventory internal control systems. The introduction section presents the meaning, purpose and background of this research, summarizes the existing researches related to inventory internal control, and puts forward the main structure and methods of this paper. The second chapter discusses the definition, related theories, main objects and key points of inventory internal control. It introduces the inventory internal control and related inventory management theory, mainly includes the target, content, key points of internal control inventory and related theory. On this basis, the third chapter first introduces the main business, organization, and the related inventory management departments of P Corporation. Then the present inventory internal control situation of P Corporation is discussed from the aspects of procurement, warehousing, storage and delivery. The fourth chapter points out the main risks that inventory internal control is facing. Set purchase and payment cycle, production and inventory cycle for example, the paper do analysis of the specific business process of the internal control construction condition. The last chapter proposes concrete suggestions for inventory internal control and their causes, combined with the improved inventory management process, put forward the suitable for developing inventory management improvements. The corresponding improving suggestions are given as well, such as establishing specialized internal control organizations and an independent inventory budget system, improving the purchasing department structure, improving the procurement efficiency, controlling the warehouse management stocktaking processes, strengthen the information exchange and communication between different departments of corporation. Hope that we can to P Corporation as an example, there is a real sense of case study material assets, other enterprises can find some real asset management inspiration and suggestion, so that enterprises can pay more attention to internal control of inventory management.